Author: Sharon, BlockBeats

Editor: Jack, BlockBeats

Despite the excitement of the recent Token2049 conference, the current state of the cryptocurrency industry seems to be mired in a slump, unable to shake off the overall sense of malaise.

On September 21st, DeFi project Fuji Finance announced that it will cease operations, and users can withdraw their funds through the user interface until 2024. This is the fourth project to announce its shutdown in September this year. Prior to this, DeFi project Gro Protocol announced its dissolution on September 20th, as well as DeFi and NFT trading robot None Trading, and NFT platform Voice founded by BM, the founder of public chain EOS.

According to BlockBeats' incomplete calculation, there were 9 projects, exchanges, and communities that shut down in the cryptocurrency industry in 2021, 17 in 2022, and 27 in 2023. At the same time, in 2023, the growth rate of shutdown projects is getting faster, increasing from an average of 1 per month to a maximum of 5 per month. Behind these events, every participant in the cryptocurrency industry, from community operations to project financing, has felt the chill of the bear market.

Project shutdowns are becoming more frequent

Fuji Finance, as the "first DeFi aggregator" on Ethereum, has now shut down, just like Gro Protocol, another DeFi project. Simply put, both projects ran out of money.

In its released press release, it pointed out that "since February of this year, the Fuji team has been raising funds to continue developing the protocol and building the future of cross-chain DeFi operations. We have been unable to find a product that is suitable for the market. As our funds continue to decrease, we have decided to start closing the company and ending operations, and there is currently no sign of the end of the fundraising activities."

On September 20th, Gro Protocol also stated that "despite the incredible dedication, time, and resources that all Gro DAO contributors and members have invested in this community and protocol over the past three years, Gro DAO finds itself facing significant challenges. Difficult market conditions, poor performance of Gro Protocol, and key deviations in Groda Pod have put Gro DAO at a critical moment, requiring decisions to be made about its future."

This decision is to suspend and dissolve, which has also been approved by a support rate of 70.95% within the community, and will focus on dissolving DAO and ceasing operations of Gro Protocol from October 3 to January 3, with a budget of 180,000 USDC. Users can withdraw assets at any time (unlimited period) from GVT, PWRD, and Pools.

The official website of Gro DAO elaborates on the reasons for the shutdown of the entire project: firstly, the performance of the protocol - the flagship product of the DAO, the risk and return graded Gro protocol, has been poor for a long time; secondly, the departure of key management personnel ("leadership vacuum"), coupled with the failure of other product Pod (Panda) expansion, has caused wider survival issues for the DAO.

Source: Gro DAO Governance

"The departure of four key figures in the Gro DAO, contributors, and community members has also accelerated the project's dissolution process. In response, there have been questions raised within the community regarding the allocation of funds in their proposal: 'Why pay two individuals $170,000 to simplify the product?' On the other hand, some have questioned the allocation of time and budget: 'This is the worst time and budget reduction proposal I have ever seen.'"

Source: Gro DAO Governance

Going back in time, EOS founder BM's NFT social platform Voice announced on September 14th that it would be shutting down due to "high uncertainty in the cryptocurrency and NFT markets." Voice was launched in June 2019 and backed by Block.one. Initially, it was a decentralized social platform that aimed to compete with Twitter (X), Facebook, and others. BM referred to it as an "application that will change the industry landscape."

At that time, Voice can be said to have been born with a silver spoon. In order to smoothly launch and better promote Voice, on the one hand, Block.one paid a fine of $24 million to the SEC to prepare for compliance with the upcoming Voice launch; on the other hand, BM spent $30 million to purchase the domain name Voice.com, becoming the largest publicly disclosed domain name sales record in history. BM believed that it was "expensive but valuable".

Despite high expectations, Voice had poor user experience and received mediocre feedback from the community after its launch. In May 2021, Block.one announced that Voice would be upgraded and transformed into an NFT-based creative and social platform for emerging creators. However, it still couldn't escape the fate of being shut down.

In addition, Nifty, the Web3 creator platform that announced its shutdown on August 3, also announced that it was due to "insufficient funds". It stated on social media that "earlier this year, considering our limited resources in a difficult market, we turned to developing a platform for Web3 creators. Since then, we have been committed to developing new products and seeking opportunities to obtain the necessary funding for continued development. Unfortunately, despite our best efforts, the investment opportunities we have been working hard on have not been successful, and we now find ourselves at the end of the road."

It can be seen that in the past month, many projects that announced their shutdown were due to insufficient funds, which is not unrelated to the current bear market situation. Recently, the PolkaWorld community has also suspended operations due to issues with funding allocation in proposals and new governance frameworks.

These projects emerged during the bull market but exited during the bear market. Behind the chaos lies the root cause of money.

Money all burned out?

Founder of IOSG, a top Chinese venture capital firm in the encryption industry, Jocy recently wrote that for many teams, if the bear market does not end, then Token2049 will be their last public appearance.

"LP continues to support early-stage VCs in the industry, while VCs continue to support founding teams in emerging tracks. Teams are constantly expanding and growing, and everything seems to be moving in a better direction. However, the reality is not so. For many teams, this 2049 may be their last hope for financing. If the bear market does not end, this may be their team's last brand exposure, because most early-stage teams have expanded in the past two years, and their runway has basically bottomed out. Some teams have a very high burn rate and have only 5-10 months left in such a market. They are even willing to buy 2049's sky-high tickets/sponsorship booths to pitch to more potential investors."

Related reading: "IOSG founder's experience at Token2049: project parties and VCs are running out of money, Token2049 becomes the last hope for financing".

This also indicates to some extent that perhaps behind the recent shutdown announcements of multiple projects, the funds that were raised initially have now been burned out. And from the financing history of several projects in recent times, this may be the case. During the previous bull market period, project financing was easy, and VCs were generous with their money.

In March 2021, Gro Protocol announced the completion of a $7.1 million seed round of financing. It is reported that the round was led by Galaxy Digital and Framework Ventures, with follow-on investments from Variant, Northzone, Nascent, and others. In July 2021, Nifty's announced the completion of a $10 million seed round of financing, with participation from Polychain Capital, Ethereal Ventures, Coinbase Ventures, A&T Capital, and others. Voice has also received $150 million in financing from Block.one.

2021 is the bull market period. Now, 2 years have passed, and perhaps, as Jocy said, the money that was once raised has been burned out. However, during the bear market period, the resistance to raising funds for these projects has increased, which has become one of the reasons for their suspension and dissolution. But perhaps, as stated in the announcements of projects such as Nifty and Fuji, they have unwavering confidence in the development of the industry, but the current situation and conditions do have a relatively large "uncertainty". Maybe in the next cycle, these projects will revive and usher in a new summer.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia