Not dead, not alive, but equally scary–“zombie” tokens have surged this year as the cryptocurrency market widens the breadth of the bear market.
Data provider Nomics studied more than 64,400 assets and discovered more than 12,100 tokens have become “zombies,” defined as tokens that have not traded for a month.
“During the bull market of 2021, there was plenty of money, attention, and liquidity for new and existing projects,” Bloomberg cites Jacob Joseph, a research analyst at researcher CryptoCompare. “However, in the ongoing bear market, even good projects with utility will struggle to sustain their operations as they lose access to capital and funding.”
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According to Nomics co-founder Nick Gauthier, it’s difficult to assess the magnitude or seriousness of the projects affected this time around, but a significant portion of these are likely memes, short-term leveraged assets, or modest personal initiatives done for fun.
BoomSpace, which claimed to be working on blockchain gaming, no longer has a live website, only a Twitter account that hasn’t been updated in months.
On tracker CoinMarketCap, Elonmoon, a token for a game about moon exploration, has a warning: “We have received multiple reports that some holders cannot sell their tokens. Please exercise caution and do your own due diligence!”
Out of the 64,000 assets studied, only 13,800–or nearly 22%–are active and have traded in a recent 24-hour period, Gauthier added. There are a plethora of coins that aren’t quite zombies yet, but are getting close, and trade at a fraction of a cent, possibly even allowing those with a taste for adventure a shot at profit.
Stalled coins could be devastating for the projects that are hedged upon it. But, when coins convert to zombies and projects become effectively defunct, it’s not as visible in crypto as it is in other industries.
Where do crypto zombies go? The industry is banking on the next bull market that may have to be ushered in by new coins, leaving the old ones in the crypto “purgatory”.
“Since the cost of a crypto startup is close to zero, and anyone in the world can try without discrimination or regulation, lots of people will keep trying,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “Where do you think the dead coins are piling up? It’s not like cyberspace is a warehouse with limited capacity.”
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
