- Over 80% of crypto startups funded in 2022 are still operating, with 76% launching products on mainnet.
- Ethereum re-staking protocol Eigenlayer emerged as the most successful project among the 2022 startups.
- Gaming and metaverse sectors had the highest failure rates, while Bitcoin projects showed resilience with no failures.
A report from venture capital firm Lattice Fund reveals that over 80% of crypto startups that raised funds in 2022 are still active, despite significant setbacks in the market. The report, released on October 1, analyzed more than 1,200 early-stage startups that collectively raised $5 billion last year. According to the report, 76% of these projects have successfully launched products on the mainnet, while around 18.5% have ceased operations.
Sector Performance and Key Insights
Among the 2022 startups, the Ethereum re-staking protocol Eigenlayer emerged as the most successful, executing its market strategy and launching a multibillion-dollar product by 2023. However, only a small fraction, about 1.5%, of all startups managed to achieve what Lattice refers to as “Product Market Fit” (PMF). Just 12% of projects secured additional funding rounds.
The report highlighted that infrastructure and centralized finance (CeFi) sectors performed well, with 80% of CeFi and 78% of infrastructure projects launching mainnet products. Conversely, the gaming and metaverse sectors showed the highest failure rates. Lattice co-founder Regan Bozman commented that chasing trends like gaming and the metaverse often led to failure, with $700 million invested in gaming seed rounds but few projects delivering tangible results.
Blockchain Preferences and Market Challenges
The report also explored the blockchain ecosystems favored by these startups. Ethereum was the most popular layer-1 ecosystem, with $1.4 billion invested in 314 projects, 18% of which have failed. Meanwhile, all 18 Bitcoin-based startups that raised funds are still operational, showing resilience against market downturns. However, the outlook was different for Solana-based projects, with 26% failing to progress to 2024 due to factors such as the collapse of FTX and a significant drop in the SOL token price.
Despite the overall stability, Lattice analysts noted that the 2022 cohort faces greater challenges compared to startups that raised funds in 2021. The current market lacks significant new retail participation, and an increasing number of seed-stage startups, combined with limited opportunities for token launches, poses difficulties for projects trying to establish a foothold.
The report further explained that investors have shifted their attention to emerging sectors such as decentralized physical infrastructure networks (DePIN) and artificial intelligence (AI), making it harder for startups from 2022 to secure funding and attention. The analysts concluded that returns often come from predicting future trends rather than following current market hype.
