Forbes lists 20 billion-dollar "zombie tokens".
Forbes compiled a list of 20 tokens with billion-dollar capitalization, large trading volume but little practical use.
Forbes lists 20 billion-dollar "zombie tokens". Photo source: Forbes
According to CoinGecko, the cryptocurrency market is worth nearly $2,500 billion with more than 14,000 tokens in existence. Do we need so many blockchain projects?
The answer is of course no.
The market does not need "similar" projects, solving almost similar problems. This fragmented liquidity, giving the community nothing but "useless" tokens that had no use other than for trading.
Surely all of us understand that "99% of existing tokens will disappear", only real projects and tokens with real economic models can exist.
But recognizing such "no application" tokens is not easy. Investors are often easily confused and dazzled by "big" technical terms and "beautiful" marketing words that paint a rosy outlook for the project. Therefore, it is difficult to determine which tokens are truly valuable or not.
Forbes' veteran writers spent a lot of time researching and analyzing to come up with a list of 20 tokens with billion-dollar capitalization but in reality they have no utility. They call them "zombie" and "alive" tokens whose sole purpose is for speculative trading.
*Note: The following information is based on Forbes' assessment.
XRP
XRP tops this list with a capitalization of $36 billion. This is also considered the "longest" living "zombie" today, when it was established in 2012.
When Jed McCaleb, Arthur Britto and David Schwartz created Ripple Labs with the XRP token, they aimed to build a new global financial standard that would allow banks to move money quickly with minimal fees.
During the first decade, dozens of financial institutions such as Bank of America and Banco Santander participated in testing Ripple's new network. To finance their ambitious project, the leaders created 100 billion XRP tokens and opened them for sale to the market with a value of up to 1.4 billion USD.
In early 2018, at the height of a strong bull-run, XRP peaked with a market value of $132 billion, giving co-founder and CEO Chris Larsen a net worth of $8 billion.
But even so, Ripple Labs still has no ability to compete with SWIFT, let alone defeat its opponent. The SWIFT international payment system sits firmly on its "throne", processing up to 5 trillion USD in interbank transfers every day.
Not only can it not be compared to SWIFT, Ripple's payment network also faces powerful stablecoin competitors such as Tether - which owns up to 100 billion USD in current supply.
Meanwhile, according to Messari data, last year, Ripple's XRP ledger only earned $583,000 in fees for processing transactions on its network - a figure that is too modest compared to the huge "vision" that the company has. propaganda company.
Furthermore, the XRP token plays no role other than for traders to trade on the secondary market. But XRP capitalization is maintained at 36 billion USD, the 6th largest coin in the industry.
Also according to Forbes' billionaire rankings, Larsen is the 7th richest billionaire in the cryptocurrency industry, with estimated assets of about 3.2 billion USD.
Ripple currently owns $24 billion worth of XRP tokens in reserves, enough to sell within the next 4 years. The company is headquartered in San Francisco, has 900 employees and continues to appear in the news for launching partnerships with a number of companies and countries.
But a decade has passed, Ripple's efforts are like "a drop in the bucket" and have not created any great progress.
Bitwise Asset Management CIO Matt Hougan commented:
“Ripple is like early-stage venture capital funds or companies that raise too much money and don't know how to deploy that money adequately.”
"Ethereum Killer" group
The largest group of zombie tokens are the "Ethereum Killers", a phrase used throughout the previous period to refer to projects that were born later but aimed to defeat Ethereum.
The group essentially claims its project is a superior improvement over Vitalik Buterin's brainchild, because Ethereum can only process dozens of transactions per second and has sky-high gas fees in the process. peak period.
But that's just an old argument. Ethereum 2024 is very different from the beginning of 2014. Although it is still expensive and has many problems, Ethereum's role in the DeFi ecosystem in particular and the industry in general is indisputable.
So where will projects that want to surpass ETH go if they cannot keep up with Ethereum's progress?
Cardano (ADA)
Cardano, once hailed as the "Ethereum Killer", was launched in 2017 when Charles Hoskinson split from ETH because of a disagreement with Vitalik Buterin.
The Cardano blockchain is worth a staggering $23 billion with a TVL of $396 million. Blockchain earned $3 million in fees last year, although the Cardano Foundation itself admits it is not yet out of the startup phase.
The entire Cardano blockchain seems to revolve around founder Hoskinson himself. He owns an 11,000-acre ranch in Wyoming, sponsors self-proclaimed "alien hunters" and recently opened an anti-aging, regenerative medicine center in the town of Gillette.
However, Hoskinson is not always trustworthy. He claimed that he had dropped out of his PhD in mathematics at the University of Colorado, Boulder, but the school said Hoskinson was a student who had not yet graduated from the University.
For many years, Hoskinson also hinted that he worked for Darpa - the prestigious research department of the Pentagon.
Matt Hougan of Bitwise comments:
“Is this a blockchain that has always claimed to be in the works or just an experiment that will never come to fruition?”
Tezos (XTZ)
Tezos was founded in 2014, as one of the first blockchains to incorporate Proof-of-Stake (PoS) testing. The project raised 230 million USD in the ICO in 2017 and the current market capitalization is 1.2 billion USD.
The Tezos blockchain processes around 130,000 transactions daily, compared to Ethereum's 1.2 million and only a TVL of 66 million USD. And Ethereum, with more than 4,500 applications running, has a TVL of $48 billion.
The goal of "leaving Ethereum" in terms of transaction processing speed is not feasible, so what about gas fees?
Tezos only collected $5,640 in transaction fees in February 2024 and $177,653 for all of 2023.
But Tezos founder Arthur Breitman affirmed that the above figure is significantly lower than the actual total amount. According to Breitman, 75% of the network fees paid in XTZ were burned - and therefore not included in the published revenue figures.
The founder estimates Tezos has $700 million in treasury and asserts that only 20% of it is XTZ tokens.
“Tezos treasury owns a lot of Bitcoin and the rest is a diversified portfolio of stocks and bonds.”
But that information cannot be verified.
The development of blockchain is controlled by the non-profit organization Tezos Foundation based in Switzerland. The mission is to “advance the Tezos protocol through grants and other means of capital deployment.”
In the first half of 2023, the Tezos Foundation awarded up to $18 million to 31 new projects, including a Philadelphia video game company building puzzles to play on the Tezos blockchain and a talent development company for Tezos. Singapore specializes in digital art.
Algorand (ALGO)
Algorand has a market capitalization of $2 billion and $500 million in treasury. Also once considered the “Ethereum Killer” because of its ability to process 7,500 transactions per second. But the network only brings in $63,000 in transaction fee revenue by 2023.
One analyst commented:
“Algorand's technology is comparable to other blockchains, but there is not much activity because the project does not have much of a community and talented programmers other than the founder."
The founder of Algorand is famous Italian computer scientist and currently MIT professor Silvio Micali.
Of course, Algorand opposes the above arguments. Algorand Foundation business development manager based in Singapore, Eric Wragge, affirmed:
“We are in the market development stage like Uber - having to pay for each person to take a ride.”
Implying that after this "money burning" period, Algorand will become a formidable opponent.
The project has "renew" its entire team at breakneck speed, and the Algorand Foundation also has a new CEO. It's unclear when this "Uber phase" will end.
Hard fork group
Forbes analysts also ranked hard fork projects from Bitcoin and Ethereum on the list of billion-dollar zombies, including Bitcoin Cash, Litecoin, Monero, Bitcoin SV and Ethereum Classic.
These names are largely the result of disagreements between developers about how the Bitcoin or Ethereum network operates. Because it is open source, anyone can use it. When developers can't get along, they split up and create a new network, using the same code as the old chain, called a hard fork.
This new chain has the same history as the original chain. And like stock splits, token holders at the time of the split receive the same number of tokens on the respective new chain.
Litecoin (LTC)
Litecoin hard forked from Bitcoin in 2011, creating a faster, cheaper version for transaction payments.
LTC's block creation speed is four times faster than BTC's, with an average of a new block every 2.5 minutes compared to BTC's every 10 minutes. Litecoin also uses Proof-of-Work (PoW), which has a total supply limited to 84 million tokens, compared to 21 million BTC tokens.
Today Litecoin has a capitalization of 6.5 billion USD, but last year only collected 389,000 USD in fees, "nothing" compared to Bitcoin's 800 million USD. This shows that users have very little need to use LTC.
If it doesn't attract users, it won't attract developers either. According to Electric Capital's Developer Report, as of the end of 2023, only 74 monthly active open source developers were supporting Litecoin, compared to more than 1,000 developers for Bitcoin and more than 7,000 developer for Ethereum.
One VC said:
“What keeps these zombie tokens alive is liquidity.
Litecoin was one of the first tokens listed by Coinbase at the time. There are still many people who own LTC.”
Bitcoin Cash (BCH)
Bitcoin Cash is even more valuable than Litecoin, with a capitalization of $7.9 billion. However there are only 30 monthly active developers and $49,000 in fee revenue by 2023.
Bitcoin Cash was born after a bitter split with Bitcoin in 2017 over whether to increase BTC's block size. The faction that forked BCH believes it should become a peer-to-peer cryptocurrency, optimal for fast and cheap transaction processing.
Bitcoin SV (BSV)
Bitcoin SV – short for “Satoshi Vision” – had an even more controversial split.
BSV is led by Craig Wright - who many claim to be the anonymous Bitcoin founder Satoshi Nakamoto. This angered the crypto community, and everyone "hated" this character.
But as Coin68 reported last March, the Supreme Court of the United Kingdom of Great Britain and Northern Ireland declared that Craig Wright is not Satoshi Nakamoto.
BSV was delisted by Coinbase in January but still maintains a capitalization of $1.6 billion. Currently, it is difficult for an ordinary user in the crypto market to state what role or function BSV plays.
Ethereum Classic (ETC)
Among the 5 names in this group, ETC is the most different because it is not a fork from Bitcoin. Today's Ethereum is a fork from Ethereum Classic.
But unlike ETH's upward momentum since the split, ETC seems to still be "stagnant". ETC maintains a $4.6 billion capitalization but generates fees below $41,000 by 2023.
Ethereum Classic Cooperative CEO Bob Summerwill admitted:
"ETC is listed almost everywhere because of its history, so it has quite a large trading volume. Much of this activity is purely speculative."
Other coins
In addition to the names mentioned above, the "zombie list" also calls:
· Internet Computer (ICP);
· Stellar (XLM);
· Stacks (STX);
· Kaspa (KAS);
· THETA;
· Fantom (FTM);
· Monero (XMR);
· Arweave (AR);
· FLOW;
· MultiversX (EGLD);
· Mina (MINA).
The 20 blockchains above have a combined value of more than $100 billion despite the fact that they have little utility beyond speculative trading. Most projects have coffers filled with millions of dollars, but they are not responsible to shareholders or regulators.
The project does not have to publicly disclose what it uses its finances for, nor does it have to have a financial report announced to investors every year. Holder buys zombie tokens while the market is rising and will still make a profit. But in the midst of a gloomy market, project operators are not capable of taking the project forward, and tokens are sinking deeply, investors cannot hold them responsible.
As long as there are enough traders trading tokens on the exchange, zombie tokens will continue to spread on the market.
