The crypto market displays deceptive resilience. Behind a stable global capitalization, a much more worrying reality is emerging: the value of tokens is eroding as their number explodes. This imbalance, pointed out by several figures in the sector, calls into question the very capacity of tokens to capture the value they claim to represent. Between massive dilution and falling returns, the industry is facing a structural flaw that could permanently redefine its functioning.
In brief
- The crypto market displays apparent stability, but hides a gradual erosion in the value of tokens.
- The rapid multiplication of tokens leads to a dilution of value despite stable overall capitalization.
- The average performance of cryptos is declining sharply, with yields falling since 2021.
- The economic model of tokens is being called into question, with some players citing a structural threat.
An explosion in supply that dilutes value
While the crypto market stagnates in extreme fear, Michael Ippolito, co-founder of Blockworks, warns of a major imbalance between creation of tokens and creation of value. He summarizes this drift with an unequivocal formula: “the average value of cryptos is barely higher than in 2020 (!) and has fallen by around 50% since 2021”. He also emphasizes a central phenomenon: “we created a ton of new assets and yet the total market capitalization remains stable”.
This dynamic translates concretely into several notable findings :
- The average value of tokens has stagnated since 2020;
- A drop of around 50% since 2021;
- Median returns falling about 80% from peaks;
- An overall capitalization which does not increase despite the multiplication of assets.
These elements reflect a progressive dilution of value, linked to an ever more abundant supply which does not meet an equivalent demand.
A break in the token model and a shift in capital
Beyond the simple question of supply, another phenomenon worries observers: the growing disconnect between the fundamentals of projects and the price of their tokens. While on-chain revenues are starting to rise again, valuations are no longer following this dynamic.
For Ippolito, this signal is critical: “the token problem poses an existential threat to the industry”. This rupture suggests that tokens no longer fulfill their initial role of capturing value, calling into question their economic utility.
This analysis is shared by Arthur Cheong, founder of DeFiance Capital, who mentions “the urgency of correcting the current situation of tokens in the crypto industry”. It warns of a risk of market concentration around a few dominant assets such as bitcoin and Ether, to the detriment of the rest of the ecosystem.
At the same time, DWF Labs data confirms an important trend: more than 80% of projects are trading below their launch price, with typical declines of 50% to 70% in just three months. This phenomenon is explained in particular by continued selling pressure linked to airdrops and token releases for early investors.
Faced with these dynamics, part of the capital is redirected towards crypto companies listed on the stock exchange, perceived as more readable and potentially less exposed to this dilution. This gradual shift in flows could mark a lasting transformation of the market, where value is no longer primarily captured via tokens. The industry thus finds itself at a tipping point, forced to rethink its value creation and distribution mechanisms to preserve its long-term credibility.
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