The Life and Death Test of the Crypto World: When the Funding Myth Crumbles, What Is the True Moat?

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2025 will be a year of thorough cleansing for the crypto industry. The once glamorous fundraising stories and star projects backed by top-tier VCs have been collapsing one after another this year. According to RootData’s data, the number of recorded project failures this year, while not reaching the peaks of the 2022 FTX collapse and the Luna crash in 2023, is fundamentally different—this wave of closures is no longer triggered by black swan events but by the complete collapse of business logic under extreme pressure.

Once highly anticipated GameFi projects like COMBO, Nyan Heroes, Ember Sword have shut down one after another; the NFT sector is even more devastated, with platforms such as Royal, RECUR, X2Y2 withdrawing from the market. What is more alarming is that even projects backed by top institutions like a16z, Polychain, Coinbase Ventures, with tens of millions of dollars in funding, have not escaped this survival crisis. Vega Protocol, which raised over a billion dollars, ultimately shut down its mainnet due to sluggish user growth; RECUR, valued at over $300 million, and DeFi protocol DELV have also reached their end. These cases send a clear signal: in today’s more conservative investment climate, the scale of funding and institutional halo are no longer guarantees of safety.

From Speculative Frenzy to Value Reassessment

The entire industry is undergoing a painful but necessary paradigm shift. The collapse of the GameFi sector is the most representative, with market size shrinking from $23.75 billion at the start of the year to $9.03 billion at year-end—a decline of over 60%. The once-popular “play-to-earn” model, lacking continuous external funding, cannot sustain high-inflation token economies, which instead accelerate user attrition. Many projects have tried to find new life by shifting to Telegram mini-programs, but due to ecosystem fractures caused by stagnation on the main chain, most of these attempts have failed.

The collapse of the NFT market is even more shocking. Total valuation plummeted from $9.2 billion in January to $2.5 billion, a 72% drop. Market activity has collapsed sharply, with the number of sellers falling below 100,000 for the first time since April 2021. The root cause is the lack of practical utility. When the speculative frenzy subsides, people realize that these digital artworks have little real value beyond hype. The crypto elite are already reallocating assets, shifting focus from digital art to more tangible, scarce physical assets.

DeFi has also not been spared, with total locked value decreasing by over 20% throughout the year. Frequent hacking attacks have shaken user trust in protocol security, and the yield from existing pools has dried up, causing capital chasing high returns to accelerate outflows. This pain confirms that projects relying on “low effort, high leverage” have lost their survival ground.

What Is the True Value of Cryptocurrency Technology?

When the bubble of speculation bursts, we need to reconsider a fundamental question: what is the true value of cryptocurrencies? How do their inherent advantages compare to traditional financial systems?

The answer is not complicated. The core advantages of crypto technology lie in the free flow of global capital—cross-border transfers without foreign exchange fees or capital controls; real-time settlement—transfers can be completed instantly without waiting days; extremely low transaction costs—not only saving credit card fees but also enabling innovative applications like streaming payments that are impossible under traditional models; programmability and composability—digital assets controlled by code rather than intermediaries, capable of flowing freely across decentralized applications, enabling more functions; permissionless openness—anyone, anywhere, anytime can access the crypto network.

Based on these core advantages, some genuinely valuable directions are emerging. The internet capital markets are among the most promising fields. This does not refer to meme coins filled with poor tokenomics but to enabling cash flows to be inherently investable on the internet. Imagine that not only on-chain DeFi applications but also real-world businesses generating stable cash flows, dividend-paying stocks, royalty streams, real estate projects, and various applications can all be tokenized, made tradable, and reassembled into new financial products.

Seeking True Value Pockets

Changes in social structure are rendering traditional “family and friends fundraising” models increasingly ineffective—families are shrinking, friends are spread across the globe, and relatives are scattered across different countries. Now, raising funds from friends and family is cumbersome and compliance is questionable, and even the process of pooling funds is fraught with difficulties. Internet capital markets make global fundraising possible again, applicable across various asset classes. Small and medium-sized enterprise financing, micro-subscription software, securitized royalty streams, creator revenue rights financing, and other niche areas urgently need on-chain fundraising tools and investor cash flow distribution applications.

Stablecoins are the least controversial golden track. The total global stablecoin supply has surpassed $300 billion, growing by trillions over the past two years. According to forecasts from the Treasury Department, this figure could approach $3 trillion by 2030. Stablecoins have significant payment advantages: instant settlement, no cross-border fees, extremely low transaction costs, and 24/7 availability. Gig economy platforms, cross-border remittances, disaster relief, and aid scenarios are ideal use cases for stablecoin payments. More importantly, the programmability of stablecoins has fostered continuous streaming payment models—automatic clock-in salary payments, clock-out salary payments, with wages settled by the second and credited instantly, eliminating the two-week payroll cycle.

Decentralized Science (DeSci) is the intersection of AI and internet capital markets. AI development has drastically lowered the barriers for individuals and small teams to conduct original scientific research, but bringing research results to market requires capital support. Many rare or niche diseases, due to small patient populations and limited short-term commercial value, are often ignored by big pharma. With permissionless global capital markets, we can find those truly interested in these diseases and inject funding into research projects. When AI and DeSci combine, individuals and small teams can also carry out cutting-edge scientific work.

Survival Is the Only Narrative

The pain of 2025 is a necessary step toward maturity. In the crypto world, high funding, star VC backing, and hot sectors do not guarantee survival. Projects lacking real user bases and sustainable business models, no matter how high their starting threshold, will quickly reach a dead end once external capital infusion stops.

However, this cleansing accelerates industry evolution. Every on-chain cash flow from the real economy makes decentralized financial architecture more valuable. When tens of millions of real economy enterprises complete their on-chain transformation, the various financial primitives tested over the past five years in DeFi will be re-empowered to serve these external cash flows, giving rise to a new financial ecosystem.

This is the worst era but also the best. As the speculative bubble deflates, the true builders are just beginning their journey. Crypto has no eternal winter or summer; surviving and finding genuine value is the only narrative. Projects that can leverage core crypto advantages and solve real-world problems will ultimately stand out in this big wave of淘沙.