- Crypto industry has too many tokens
- Mergers and acquisitions are coming to consolidate DeFi and meme coins
- Tokens like ‘ShibaPepes’ and ‘FlokiDoges’ could emerge from M&As
Cryptocurrencies have exploded in popularity in recent years, with new tokens emerging on a regular basis. However, some experts believe that consolidation is on the horizon.
The Rise of Cryptocurrencies Has Led to Market Saturation
Thousands of cryptocurrencies now exist, from major coins like Bitcoin and Ethereum to minor altcoins and meme coins like Dogecoin and Shiba Inu. This has led to a crowded marketplace where many tokens have unclear utility.
“There are too many tokens right now,” said Simon Kim, CEO of venture fund Hashed.
He believes the market has become oversaturated, making it difficult for investors to discern valuable projects from superficial ones. Consolidation could help streamline the market and direct capital to the strongest projects.
Mergers and Acquisitions May Bring More Legitimacy
Mergers and acquisitions (M&As) among cryptocurrency firms could bring more structure and legitimacy to the space.
Kim predicts established players will acquire smaller tokens, allowing the most promising aspects of these tokens to be incorporated into the acquiring firm’s offerings.
For example, a meme coin like Shiba Inu could be acquired by a company like FTX. This could lead to combined tokens like “ShibaPepes” or “FlokiDoges” that integrate the meme coin community with the acquiring platform’s capabilities.
Consolidation Can Increase Use Cases and Value
While M&As may reduce the total number of cryptocurrencies, the combinations could actually increase utility and value.
“Consolidation will lead to real use cases,” said Kim. By merging communities and features from different tokens, the new entities could gain more traction and adoption in DeFi, NFTs, the metaverse, and other areas.
Regulatory Scrutiny Remains a Challenge
However, major mergers will likely invite additional regulatory scrutiny. Cryptocurrencies already operate in a legal gray area in many jurisdictions. High-profile M&As could force regulators to provide more definitive guidance.
It remains to be seen if cryptocurrency consolidation will accelerate in 2023 and beyond. But for now, this potential trend highlights the maturing nature of the crypto ecosystem.
