New coin listings in 2023 between January 1 and February 15 have fallen dramatically compared to the start of last year. Applications to list new tokens on crypto data provider CoinMarketCap for the period dropped to 2,995 coins, according to data shared with DL News.
That’s down from 10,264 new coins being listed in the first quarter of 2022, during the early days of the bear market. That was before the unravelling of Do Kwon’s Terra ecosystem and the collapse of Sam Bankman-Fried’s FTX exchange unleashed further carnage on the market.
CoinMarketCap, owned by Binance, is one of the two major crypto data providers. CoinGecko is its close rival.
CoinMarketCap requires new cryptocurrency projects to fill in an application form to be considered for a listing on the website. In addition, they must meet certain guidelines: they must have a functional website, a block explorer, a contactable representative, and be publicly traded on an exchange verified by CoinMarketCap.
CoinMarketCap said that the plummeting figures could simply be due to crypto projects biding their time in anticipation of more favourable market conditions.
“I would attribute this [decline] to projects delaying token generation events due to the bearish outlook,” Aaron Khoo, head of ecosystem at CoinMarketCap, told DL News. Token generation events are when a crypto project releases tokens to the market.
“They are beholden to their private investors, and launching during more propitious market conditions would probably be more positive for enterprise value,” Khoo said.
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The projects that remain are longer-term thinkers, said Dimitrios Chatzianagnostou, head of token economies and NFT at Outlier Ventures, a web3 accelerator.
“We see that in general in deals, the cliffs and vesting are also increasing, indicating that there’s much more caution and people being less radical and aggressive with token supply,” Chatzianagnostou told DL News.
Vesting refers to the process of locking up tokens and releasing them over time. Cliffs are a type of vesting consisting of a period in which no tokens are released.
Eloisa Marchesoni, an independent tokenomics consultant, who normally advises venture capital-backed companies, said she has lately been fielding inquiries from VCs and individual investors themselves.
“There has been an uptick in demand for the creation and auditing of token models, especially now that investors of all kinds are becoming more sceptical about the sustainability of projects,” Marchesoni told DL News.
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That demand may reflect a growing recognition among investors that traditional due diligence for tech companies — evaluating product market fit, the competence of founders — is not enough for crypto projects, where tokens are involved.
Pivoting a token strategy is next to impossible, and so it’s important to get it right at the start, said Lisa Tan, founder of consultancy Economics Design in Singapore.
“Tokens are not something where you can say, ‘Today we have this token model’ and tomorrow you completely change it to a brand new thing. You can’t do that,” Tan told DL News.
