Critics say the crypto bear market has sounded Web3’s death knell. There’s no doubt the casualties are mounting.
Once-hyped projects are shuttering. Ecosystems that commanded billion-dollar valuations look like ghost towns. Meme coins that minted overnight millionaires are reverting to zero.
The haters say Web3 has been shown-up for what it always was: a liquidity-fueled mirage confected from speculative tokenomics and absent use cases.
There’s some truth in that. But it’s also true that bear markets do more than destroy. They stress-test narratives and separate winners from losers.
What we’re seeing now is the market’s version of a Darwinian reset, where selection favours the strong.
The Damage is Real
Too many Web3 projects that surged in 2024’s bull wave were long on decentralization rhetoric and short on product-market fit. Token launches masqueraded as business models while bribe-fueled user growth masked fragile demand.
Recent figures suggests the overwhelming majority of unprofitable Web3 projects depend more on token speculation than sustainable revenue. In blockchain gaming, more than 90% of project tokens are 90% below their highs.
More worrying for blockchain purists is the fact that community governance promises have fizzled out. DAO participation in many major protocols routinely falls below 1% and some ecosystems have seen governance engagement drops of 60–90% year-over-year
Power has a habit of concentrating, especially when governance tokens double as financial instruments. Large holders can amplify influence across multiple wallets, creating the appearance of consensus. Analysts warn that parts of Web3 risk re-centralizing under dominant actors.
Layer on a risk-off macro environment and tightening liquidity, and the cracks widen fast.
It looks bad. And …