In a recent report, venture capital firm Lattice studied the follow-up development of over 1200 cryptocurrency pre seed and seed startups (covering only memory blockchain networks with at least 15 projects receiving financing) since 2022. It was found that approximately one-fifth of Ethereum projects have gone bankrupt in the past two years, which is lower than the 26% bankruptcy rate of the Solana ecosystem. In contrast, projects based on BNB Chain are the most unstable, with one-third of teams ceasing operations.

Ethereum startups perform well

Lattice stated that the influx of speculative funds during the bull market led to excessive expansion of many projects, ultimately resulting in bankruptcy. In addition, according to the founder's public statements in the bankruptcy declaration, many projects attribute the bankruptcy to a sharp decline in the market, as well as events such as the collapse of the Terra ecosystem and the bankruptcy of FTX.

The report also points out that since 2022, nearly 80% of Ethereum seed round startups have launched products, while only slightly over 60% of Solana projects have been able to do so.

Although Solana's price has risen by 32% this year, the report still reminds people that the cryptocurrency market has only experienced two severe years before the 2024 rally and may not have fully recovered yet.

According to Lattice's data, investors invested over $5 billion in nearly 1200 cryptocurrency startups in 2022, a 150% increase compared to 2021. Nearly 30% of it, or approximately $1.4 billion, was used for seed round investments in Ethereum related startups, while Solana's early-stage project attracted 7% of the funding, or approximately $350 million.

Games and metaverse concepts have the highest failure rates

NFT、 Hotspots such as Metaverse and Web3 games have driven capital inflows, and cryptocurrency entrepreneurs have chosen to invest in these conceptual sectors. However, this may be a wrong decision. Lattice Capital co-founder Regan Bozman tweeted:

Chasing hot topics may result in heavy losses, with $700 million invested in seed rounds of gaming, but gaming and metaverse are the areas with the highest failure rates

On the other hand, Lattice pointed out in the report that there is a growing trend in investment in privacy enhancing technologies, artificial intelligence, and DePIN (decentralized physical infrastructure network).

The market crash has reduced VC's interest in subsequent investments

With the occurrence of scandals and industry failures, market enthusiasm gradually fades and capital flows cease, making it more difficult for startups to raise funds. Only 12% of the teams that received financing in 2022 received follow-up funding.

Although 72% of the teams that received funding have already launched products, there are still 18% who have not yet launched products or have gone bankrupt. During this period, Ethereum related startups had the highest success rate of launching products, reaching 80%, while Solana's proportion was only 61%.