Original author: Sharon, BlockBeats
Original editor: Jack, BlockBeats
Although the Token 2049 conference just passed was very lively, the current situation of the encryption industry seems to be in a quagmire and cannot escape the overall downturn.
On September 21, the DeFi project Fuji Finance announced that it would cease operations and that users would be able to withdraw funds through the user interface until 2024. This is already the fourth project to announce its suspension in September this year. Before it, there were the DeFi project Gro Protocol on September 20, the DeFi and NFT trading robot None Trading on September 20, and the company’s disbandment. Voice, an NFT platform founded by BM, the founder of chain EOS.
According to incomplete calculations by BlockBeats, 9 projects, exchanges and communities in the cryptocurrency industry will cease operations in 2021, 17 in 2022, and 27 in 2023. At the same time, in 2023, the number of suspended projects will grow faster and faster, from an average of 1 per month to a maximum of 5 per month. Behind these events, from community operations to project financing, every participant in the crypto industry has felt the chill of the bear market.
Project outages are becoming more frequent
Fuji Finance, as the first DiFi aggregator on Ethereum, is now closed, just like Gro Protocol, which is also a DiFi project. Simply put, it is because of lack of money.
It stated in the press release that “Since February of this year, the Fuji team has been raising funds to continue to develop the protocol and build 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 reduction, we have decided we need to begin closing the company and winding down operations, with no end in sight for our fundraising efforts.
Gro Protocol on September 20 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 an intolerable situation. Challenges ignored. A difficult market, Gro Protocol’s underperformance, and a critical departure from the Groda Pod put Gro DAO at a critical juncture, requiring decisions to be made about its future.”
This decision is to suspend operations and disband. It was also approved with a support rate of 70.95% in the community. From October 3 to January 3, it will focus on disbanding the DAO and stopping the operation of Gro Protocol, with a budget of 180,000 USDC, users can withdraw assets from GVT, PWRD and Pools at any time (indefinitely).
The Gro DAO official website elaborated on the reasons for the outage of the entire project: firstly, the performance of the protocol - DAOs flagship product risk and return grading Gro protocol has performed poorly for a long time; secondly, the departure of key management personnel (Leadership Power vacuum), coupled with the failure of expansion of other products Pod (Panda), triggered a broader survival problem for DAO.
Source: Gro DAO Governance
The departure of four key figures of Gro DAO, the separation of contributors and the community also accelerated the dissolution of the project. In this regard, some people in the community pointed out that there was a problem with the spending of funds in his proposal: Why pay 2 people $170,000 to simplify the product? On the other hand, some people questioned the allocation of time and the budget of funds: This is the worst time and funding reduction proposal I have ever seen.
Source: Gro DAO Governance
Going forward further, EOS founder BMs NFT social platform Voice announced its suspension on September 14 due to high uncertainty in the cryptocurrency and NFT markets. Voice was launched in June 2019, backed by Block.one. It was initially a decentralized social platform, benchmarking Twitter (X), Facebook, etc., and BM called it an application that will change the industry landscape.
At that time, Voice could be said to be born with a silver spoon in its mouth. In order for Voice to be launched smoothly and promoted better, on the one hand, Block.one paid a fine of US$24 million to the SEC to prepare for compliance for the upcoming launch of Voice; on the other hand, BM spent US$30 million to purchase domain names Voice.com became the largest publicly disclosed domain name sale record in history, and BM considered it very expensive but valuable.
Despite high hopes, Voice has experienced poor user experience and mediocre response from the community since its launch. In May 2021, Block.one announced that Voice would be upgraded and transformed into an NFT-based creation and social platform for emerging creators, but now it cannot escape the fate of closure.
In addition, Nifty, the Web3 creator platform that announced its suspension on August 3, also announced its suspension due to insufficient funds. It pointed out on social media that earlier this year, considering our limited resources in a difficult market, We pivoted to developing a platform for Web3 creators. Since then, we have been working on developing new products and looking for opportunities to obtain the funding needed to continue development. Unfortunately, despite our best efforts, we are struggling to invest The opportunity did not pan out and we now find ourselves at the end of the road.
It can be seen that most of the projects announced to be suspended in the past month are due to insufficient funds, which is not unrelated to the current bear market. Recently, the PolkaWorld community has also suspended operations due to issues with fund allocation in proposals and new governance frameworks.
These projects all emerged in the bull market but exited in the bear market. Behind all the chicken feathers, the root is still money.
All the money is burned?
Jocy, the founder of IOSG, a venture capital institution in the crypto industry, recently wrote that for many teams, if the bear market does not end, this (referring to Token 2049) will be their last public appearance.
LPs continue to support early-stage VCs who are growing in the industry. VCs continue to support founding teams in some emerging fields. The teams continue to expand and grow in scale. It seems that everything is developing in a better direction. But in fact, this is not the case. Many Basically, this time 2049 has become their last hope of financing. If the bear market does not end, this may be the last brand exposure of their team, because most of the early teams have expanded in the past two years, making the runway basically invisible. At the end of the day, some teams have very high burn rates and only have 5 to 10 months left in such a market. They even buy sky-high tickets/sponsored booths for 2049 to pitch more potential investors.
This also points out to a certain extent that perhaps the reason behind the recent announcement of the suspension of many projects is that all the funds originally raised have now been burned. Judging from the financing history of several recent projects, this may be the case. During the previous bull market, project financing was easy and VCs were generous with their money.
In March 2021, Gro Protocol announced the completion of a US$7.1 million seed round of financing. It is reported that this round of financing was led by Galaxy Digital and Framework Ventures, with participation from Variant, Northzone, Nascent, etc.; in July 2021, Niftys announced the completion of a US$10 million In the seed round of financing, Polychain Capital, Ethereal Ventures, Coinbase Ventures, AT Capital, etc. participated; Voice even received US$150 million in financing from Block.one.
2021 is during the bull market, and now 2 years have passed. Perhaps, as Jocy said, all the money that was raised has now been burned. But now during the bear market, the resistance to raising funds for these projects has become greater, which has become one of the reasons for the suspension and dissolution. But perhaps as Nifty, Fuji and other projects said in their announcements, they have unwavering confidence in the development of the industry, but the current situation and conditions do have relatively large uncertainties. Maybe in the next cycle, these projects will come back to life and usher in a new summer.
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