Hindsight is ERC-20/20

Lackluster vetting and a premature market gives Ethereum a fragile dominance amongst platforms

Just your average ICO “unicorn”…

You don’t have to look too hard to see a misalignment of vision and practice with so many blockchain projects (outright scams in the worst-case scenario). Unfortunately for Ethereum, their platform has carried the brunt of this burden due in part to lackluster dApp vetting, a premature market, and the double-edged sword of first mover advantage…

All Hat, No Cattle?

Data Source: CoinMarketCap

Walking through the data, we see to the left that tokens on the Ethereum platform make up a clear majority (78%) of the token market cap. It’s important to note here that the second largest platform, Omni, owes its size primarily to Tether (USDT). Now looking at the volume, there is a mirror reversal in that Omni/Tether takes up 78% of the volume amongst platforms, most likely for traders looking to dampen their volatility risk as the only stable “safe” haven in a turbulent market. With such comparatively low volume of Ethereum tokens compared to Omni/Tether, it begs the question…where are they now?

Decentralized Landfill…

In addition to having 78% of the token market cap, the Ethereum platform takes up 88% of the total number of projects equalling 691 according to CoinMarketCap (CMC). Using this as an assumption for the ecosystem and combining it with data from Dead Coins yields an estimated 791 Ethereum token failures to date. The pie chart below gives an approximate idea of the current ecosystem.

Data Sources: CoinMarketCap & Dead Coins

Now it may seem like this isn’t too bad, especially considering ~90% of startups fail (because realistically these are all startups). However, digging a little bit deeper into the 46% (691) of “live” ETH projects reveals that many are already on the cusp of losing steam. CMC data suggests that of these projects, 52% have volumes below $100K, 30% below $10K, and 15% below $1K. Time will tell for the remainders but you know it’s bad when there’s a crypto project dedicated to cleaning up the aftermath.

But What About “Real Use Cases?”

It’s not just trading activity that illustrates a bleak future for many projects. According to DappRadar.com, outside of exchange categories, token use often hits a peak (likely at dApp launch) and quickly dwindle thereafter, Augur being one of the most recent examples.