MarketsAltcoins
|4 min ReadThe 2025 Crypto Graveyard: Why $700 Million in VC Funding Went to Zero
Lucca Menezes
Senior Analyst
Published
Jan 16, 2026
"There is no eternal winter or summer in crypto. There is only survival."
2025 will be remembered as the year of the "Great Cleansing."
The market shifted from speculative mania to ruthless efficiency. The illusion of liquidity vanished, and with it, hundreds of projects that had raised millions but built nothing.
According to new data from RootData, 2025 saw a massive wave of project shutdowns. Unlike the FTX-driven contagion of 2022, this year's deaths were different: They were caused by the collapse of bad business logic.
Here is the breakdown of why the stars of the last cycle are dead today.
The Death Toll: Structural Collapse
The number of failed projects in 2025 reflects a market that has stopped tolerating "narrative without product."
GameFi was the hardest-hit sector. As the "Play-to-Earn" Ponzi model collapsed, the sector's market cap shrank by 60% (from $23.7B to $9B). Projects like COMBO, Nyan Heroes, and Ember Sword shut down, proving that high inflation tokenomics cannot survive without constant new money.
NFTs became a wasteland. The market valuation plummeted 72%, and the number of active sellers dropped below 100k for the first time since 2021. With the "digital art" narrative exhausted, capital fled to RWAs.
The VC Fallacy: Money Can't Buy PMF
The most shocking aspect of 2025 was that money didn't buy survival. Top-tier VC backing from a16z, Coinbase Ventures, and Polychain proved useless against a lack of Product-Market Fit.
The $100M Failure (Vega Protocol): Despite raising ~$100M from Coinbase, Ripple, and 27 others, Vega's decentralized derivatives layer failed to gain traction against competitors like Hyperliquid. The community voted to shut down the chain.
The NFT Bubble (Royal & RECUR): Royal ($71M from a16z) and RECUR ($55M raised at a $300M valuation) both collapsed. When secondary volume dried up (-66%), their business models evaporated.
The Infrastructure Ghost (CLV): Clover Finance raised $47M from Polychain/OKX to bet on Polkadot. As the Polkadot ecosystem faded, CLV lost liquidity and quietly ceased operations.
The Metaverse Retreat (Futureverse): Raised $54M. As the metaverse narrative receded, revenue couldn't support the valuation, leading to liquidation.
The "Walking Dead": The Zombie Projects
Beyond the official deaths, RootData identified a massive list of "Zombie Projects"—protocols that haven't declared bankruptcy but have ceased all meaningful updates.
This list includes fallen DeFi stars like Set Protocol and AutoFarm, and infrastructure plays like Reach and Pinknode. They exist in a state of purgatory: their tokens still trade, but the teams have moved on. They are the remnants of the 2022-2023 transition, waiting for the final plug to be pulled.
The Verdict
The pain of 2025 is a necessary evolution.
The projects that died were remnants of a Zero-Interest-Rate Phenomenon (ZIRP). They were built on "low effort, high leverage."
The market is now forcing a binary pivot: If you don't have sustainable revenue, you don't have a future. As we enter 2026, the lesson is clear: A $100M war chest is not a business model; it's just a longer runway to the same grave.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.