The explosion of blockchain technology over the past decade has created a wave of expectations for a decentralized, transparent and absolutely secure economy. However, according to experts at Tan Phat Digital, when entering the 2024-2025 period, the market witnessed a harsh situation: the majority of projects, despite possessing advanced technology platforms and talented development teams, still fell into stagnation or completely collapsed. This failure is not simply a consequence of price fluctuation cycles, but is the result of a complex set of factors including flawed token economics design, lack of practical application value, technical scalability limitations, and serious flaws in system governance and security.
Market Status and System Failure Rates
The Big Picture of the Market The blockchain market of late 2024 and early 2025 shows a brutal purge, especially in once-hot segments like GameFi and NFTs. According to data analysis from ChainPlay and market research organizations, the failure rate of blockchain projects has reached a record level, raising a big question mark about the sustainability of current startup models.
Statistics of failure rate and project longevity
A detailed study of 3,279 GameFi projects shows an ominous situation: about 93% of projects in this segment are classified in the "dead" category. The definition of a "dead" project in this context is based not only on shutdowns but also on two core financial and social metrics: token value down more than 90% from historical peak and daily active users (DAU) remaining below 100 people.
More notable, the average lifespan of a GameFi project in 2024 lasts a mere four months. This reflects a "short lifecycle" business model where projects are built on temporary market excitement rather than long-term core values. Although total investment capital for GameFi will still reach 859 million USD in 2024 with the number of capital calls increasing by 44%, this cash flow tends to focus on projects with high potential and more sustainable models, while small startups lacking operational capacity are quickly eliminated.
Statistics of failure rate by market segment Market:
GameFi: Failure rate is up to 93%, average lifespan is only 4 months, average token price drop is 95%.
NFT project: Failure rate is over 95%, average lifespan is 3-5 months, token price usually drops more than 90% compared to peak.
DeFi Protocol: About 63% of projects have recorded attacks, lifespan varies depending on security level, but overall loss reduction has improved by 37%.
Enterprise Blockchain: High stagnation rate due to difficulty in widespread adoption, average test project lifespan ranges from 12-24 month.
This decline is not limited to financial value but is also reflected in the shift in the focus of community attention. Investor interest in the GameFi segment has plummeted from 10.49% in 2023 to 3.72% in 2024, giving way to emerging topics such as Artificial Intelligence (AI), Tokenized Real Assets (RWA), and Meme coins.
Tokenomics Vulnerability: The Silent Killer of Startups
At Tan Phat Digital, we believe that the leading cause of the collapse of blockchain projects is unsustainable Tokenomics (token economics) design. Tokenomics is not just about issuing a digital currency but about creating a balanced supply and demand ecosystem, where tokens act as the lifeblood that maintains the system's operations.
Imbalance between supply and demand
Host-inflation is the most common problem in weak tokenomics designs. When a project releases tokens to the market too quickly compared to actual operating performance and revenue, token prices will inevitably decline due to selling pressure from users and investors who do not see long-term holding motivation.
The case of the Pangolin (PNG) protocol is a typical example of the imbalance between revenue and release value. During peak activity, this project unlocked up to 197,500 USD worth of tokens per day, while the actual revenue from transaction fees did not reach 30,000 USD. This huge difference forced the token price to adjust deeply (from 15 USD to 1.2 USD) to reflect the actual value of the network, leading to holders (holders) suffering heavy losses and leaving the project.
Improper allocation and release schedule
Unbalanced token allocation (Allocation) among stakeholders often leads to the concentration of power or lack of development motivation. If the ratio for the development team (Team) is too low (less than 5%), they will not have enough financial commitment to pursue the project when the market is difficult. On the contrary, if this rate is too high (over 20%), the community will be concerned about the possibility of price manipulation and lack of fairness in governance.
Core Tokenomics factors and impact:
Inflation rate: If designed poorly, token prices will drop sharply due to supply exceeding actual demand. A sustainable solution is to tie token issuance to real platform revenue growth.
Team Allocation: A ratio below 5% causes a lack of long-term motivation, while above 20% creates the risk of power concentration and price manipulation. The ideal level is to maintain around 20% with a vesting period of 5 years.
Token utility (Utility): If the token is only speculative, the project will have no real need to buy it. It is necessary to integrate tokens into activities such as payment of fees, system administration or staking to receive rewards.
Price difference of opening sale rounds: Too large difference between Seed and Public Sale rounds causes sell-off pressure from early investors. The solution is to design the Vesting and Cliff (waiting time) mechanisms very tightly.
See more: What is Blockchain Trilemma? 2030 Implementation Roadmap
Lack of practical applications and Product-Market Fit problems
An ironic reality that Tan Phat Digital often observes is the existence of many solutions looking for problems. Many startups develop decentralized platforms for needs that a traditional centralized database can solve much more efficiently and cheaply.
The Prioritization of Technology Over Users
The "tech-first" over "user-first" mindset has led to many projects being built on unrealistic assumptions about user needs for decentralization. Implementing blockchain into simple processes often brings the burden of operational costs, system latency, and poor user experience (UX).
In the GameFi segment, more than 60% of players abandon Web3 games after just 30 days due to the lack of long-term incentives and monotonous gameplay. When the user's only goal is to "make money", the project will collapse as soon as the token profits are no longer enough to compensate for the time and effort spent. Complicated user experience, including having to set up wallets, manage seed phrases, and deal with fluctuating gas fees, was identified by 53% of industry experts as the biggest barrier to real user acquisition.
Blockchain vs Centralized Systems: The Cost of Trust
Quantitative studies have shown that integrating blockchain into cloud systems increases transaction latency from 120% to 450% and reduce system throughput by up to 70% compared to centralized databases. In particular, the energy consumption of blockchains based on the Proof of Authority (PoA) mechanism is 15 times higher than that of centralized solutions under the same load.
Performance comparison between Centralized systems and Blockchain:
Throughput (TPS): Centralized systems (like MySQL) reach tens of thousands of transactions per second. Layer 1 blockchain (like Ethereum) currently only reaches about 14-15 TPS, making it difficult to scale large.
Latency: Centralized systems have extremely low latency. Blockchain's latency increases from 120% to 450% due to the burden from the consensus mechanism and data encryption.
Energy consumption: Centralized system is maximally optimized. Blockchain (especially the PoA mechanism) consumes 15 times more energy under the same workload.
Storage costs: Centralized systems have cheap and flexible storage costs. Blockchain has very expensive storage costs due to the need for data to be replicated synchronously at every node in the network.
This difference makes it difficult for blockchain to compete with traditional systems such as Visa or PayPal in applications that require high performance. If a project does not deliver superior value-added immutability and censorship resistance to compensate for this drop in performance, it will quickly fail.
Governance and Strategic Mistakes in Stakeholders
Blockchain promises a transparent and trustless governance model, but the reality is that projects often fail due to weak governance and a lack of trust between stakeholders.
Failure of large infrastructure projects: TradeLens and ASX CHESS
The case of TradeLens - a supply chain platform built by IBM and Maersk - is an expensive lesson in the lack of stakeholder engagement. Although a great idea in theory, TradeLens had to shut down in early 2023 because it failed to achieve the necessary level of cooperation from the industry. Maersk's competitors are concerned about sharing sensitive data on a platform partly owned by their largest rival.
Similarly, the project to replace the Australian Securities Exchange (ASX)'s CHESS clearing system with blockchain technology has become a "governance disaster" with costs reaching up to $250 million. ASX has been accused of making misleading statements about project progress, when in fact the system has serious scalability issues. The lack of technology governance experience at the board level led to the project being suspended indefinitely after 7 years of development.
The paradox of decentralization
Many projects fail because they "decentralize" just for the sake of it, without clearly understanding why it is necessary to do so. Conversely, some projects fall into oligarchic governance, where large token holders completely control the network. At the EOS network, the extremely low voter participation rate (less than 2%) caused the governance system to collapse, leading to the formation of vote-trading markets. This proves that blockchain technology cannot solve core problems of human nature without a professional governance process like the approach of Tan Phat Digital.
Security risks and sophistication of cyber criminals
In the blockchain world, programming errors often mean irreparable financial loss. The immutability of smart contracts makes every vulnerability a permanent target for attackers.
Classic and emerging smart contract vulnerabilities
2024 and 2025 saw a strong comeback in smart contract attacks, with total losses exceeding $3.1 billion in the DeFi segment alone. The most common attack vectors include:
Reentrancy attack: The attacker makes a recursive function call into the victim contract to continuously withdraw funds before the balance status has updated.
Price Oracle Manipulation: Taking advantage of flash loans to fluctuate asset prices on decentralized exchanges, thereby deceiving the protocol about value collateral.
Access Control Errors: Failure to properly limit permissions in sensitive functions allows hackers to gain control or withdraw funds.
Typical types of security attacks and damages:
Stealing private keys (Stolen Private Keys): Hackers penetrate and steal administrator keys system members, causing losses of about 449 million USD in 2024 alone.
Manipulating price Oracle: Using Flash Loan to skew asset prices for profiteering, causing losses of about 52 million USD in 2024.
Reentrancy attack: Taking advantage of recursive withdrawal errors to deplete funds, causing losses of about 47 million USD million USD in 2024.
Phishing and Malware:Luring users to sign malicious transactions to drain their wallets, causing huge losses estimated at up to 14 billion USD by 2025.
The emergence of AI is also changing the security landscape. 2025 studies show that AI agents are capable of autonomously detecting and successfully exploiting zero-day vulnerabilities in smart contracts in just a few minutes.
See also: What is Tokenomics? Analyzing the importance of Tokenomics in Blockchain
Case analysis: AntEx and Shark Binh
The AntEx project is a specific example analyzed by Tan Phat Digital as a combination of administrative violations, lack of operational capacity and signs of systematic fraud in the Vietnamese market. This project was strongly promoted through the reputation of Mr. Nguyen Hoa Binh (Shark Binh) and the NextTech ecosystem.
Crash mechanism and violations according to police conclusions
Token dumping (Dumping): The project team used hundreds of wallet addresses to conduct a mass dump of tokens right after listing, causing the price to drop 99% after just 5 months.
Slow rug pull: Instead of performing a quick price collapse, the project performed a partial liquidity withdrawal to other stable coins to avoid early detection.
Misuse of capital: The suspects withdrew money from the project's general wallet to convert it into VND to share or transfer it to companies in their own ecosystem instead of deploying it. project according to the roadmap.
Fraudulent appropriation of assets: The police agency determined that the amount of money appropriated was particularly large, up to 4.5 million USD from about 30,000 investors. When the project collapsed, the official media channels all disappeared.
Case analysis: GameFi and Axie Infinity
Axie Infinity, once considered the "gold standard" of the Play-to-Earn model, could not escape the crisis when the platform indexes began to decline sharply.
The decline of the "Play to Earn" model money"
Axie's huge success in 2021 is largely based on the pandemic context and temporary euphoria. However, its economic model has serious errors in long-term sustainability when the demand for token consumption depends entirely on the influx of new players.
The decline of Axie Infinity's metrics:
Daily Users (DAU): From a peak of 2.7 million users in 2021, it has plummeted to only about 350,000 people, equivalent to a decrease 90%.
AXS token value: From around 160 USD in its heyday, it has dropped to around 4-6 USD, a 99% decrease in value.
SLP token value: Once reached 0.39 USD but is now only below 0.0025 USD, recording a decrease 99%.
Business valuation: Sky Mavis was once valued at up to 3 billion USD, but its actual value has been seriously eroded after security incidents and market downturn.
The Ronin hack incident that took away more than 600 million USD has eroded community trust. Axie then had to make a strategic shift to a "Play-and-Earn" model, focusing on entertainment value rather than relying solely on financial returns.
Operating capacity and lack of business experience
An often overlooked factor is actual operating capacity. Many blockchain projects fail because the founding team only has technology knowledge and completely lacks experience in business management, marketing and building professional community relations.
The Gap Between Hype and Reality
In the period 2021-2022, venture capital funds have massively poured money into Web3 projects, leading to a situation where startups raise their valuations too high before having real products. international. This creates a work environment that lacks revenue pressure, leading to bloated teams and spending that exceeds their ability to truly attract users.
Research shows that 90% of startups fail in all fields, but in blockchain, this rate is even higher. Project leaders often ignore basic business ethics values such as setting a clear mission and vision. This lack of experience leads to the project's inability to adapt when the market turns difficult.
Orientation for recovery and sustainable trends for the future
Despite the high failure rate, the demise of poor quality models is paving the way for a new generation of blockchain projects with more intrinsic value that Tan Phat Digital is actively monitoring.
The shifting investment capital flows 2025-2026
From 2025, investment capital flows will shift strongly to practical applications instead of pure infrastructure:
Tokenization of real assets (RWA): Converting real estate and bonds to the chain to increase liquidity.
AI x Blockchain: Using blockchain to verify origin data for AI.
PayFi and Stablecoins: Using stablecoins as a truly global payment infrastructure.
Recommendations from Tan Phat Digital
To avoid falling into a failure scenario, projects and investors need to pay attention:
Tokenomics design based on real revenue: Tokens need have a mechanism to capture value from business activities instead of relying on inflation.
Improve user experience (UX): Reduce complex technical barriers, towards smoothness like traditional applications.
Enhanced security and auditing: Conducting periodic audits by reputable organizations is a mandatory process mandatory.
Proactive legal compliance: Carefully research international legal frameworks to ensure long-term legality.
Frequently Asked Questions (FAQs)
Why will 93% of GameFi projects fail in 2024-2025? Most of these projects have an average lifespan just 4 months because of excessive focus on the unsustainable "Play to Earn" (P2E) model. As the number of new players decreased, the in-game economy skyrocketed, causing tokens to lose value, leading to users leaving in droves.
What is the clearest sign of an unsustainable Tokenomics design? It is when the amount of tokens released into the market is much faster than the actual revenue growth rate, causing inflation. Additionally, allocating more than 20% to the development team without a strict vesting schedule is also a danger signal.
Does Blockchain really slow down enterprise systems compared to centralized systems? Yes. Blockchain integration increases transaction latency by 120% to 450% and reduces system throughput by up to 70% compared to traditional databases. If the project does not need high immutability, using a centralized database will be much more effective.
What specific violations has the authorities accused of the AntEx project? Hanoi City Police prosecuted related individuals for allegedly fraudulently appropriating property. Violations include: mass dumping of tokens after listing (dumping), gradual withdrawal of liquidity (slow rug pull) and using capital raised from investors for wrong purposes.
Why did a large project like IBM and Maersk's TradeLens have to close? The main reason is the lack of trust and cooperation from competitors in the shipping industry. They feared having to share sensitive data on a platform owned by its largest competitor, leading to the project not reaching "critical mass" for commercial operation.
How is the "Real Yield" model different from the traditional reward token printing model? "Real Yield" is the profit paid to holders extracted from the protocol's real revenue (such as transaction fees, interest) instead of printing new tokens to pay rewards. This helps maintain a more stable token value over the long term.
What is the biggest barrier preventing mainstream users from accessing Web3? It's a terrible user experience (UX): a complicated wallet setup process, difficult seed phrase management, fluctuating gas fees, and overly abstract technical terms. More than 75% of new users consider onboarding to be the main barrier.
What is a Reentrancy attack in smart contracts? This is a programming error that allows an attacker to repeatedly call a withdrawal function before the balance status is updated. The famous The DAO hack in 2016 is a prime example of a hard fork on the Ethereum network.
Can I recover gas fees from an erroneous or failed blockchain transaction? No. Gas fees are the fees you pay miners or validators to process transactions on the network. Even if the transaction fails due to a logic error in the smart contract, miners still spend energy processing it, so the gas fee will not be refunded.
Which blockchain trend does Tan Phat Digital predict will be the most sustainable from 2026? Capital flow will shift strongly to Real Asset Tokenization (RWA), the combination of AI and Blockchain to verify data, and the use of Stablecoins as a truly global payment infrastructure (PayFi).
The failure of many blockchain projects despite good technology in the 2024-2025 period is an inevitable period of market purification. With experience observing the market, Tan Phat Digital believes that a project can only be successful when it finds the intersection between: technology to solve real problems, sustainable economic model, transparent management and professional operating capacity. Painful lessons from the past are the premise for building a future where blockchain truly becomes part of the global economic infrastructure, not as a speculative tool, but as a solution to increase efficiency and sustainable trust.
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