Over 80% of 2022 Crypto Startups Remain Active Despite Market Turmoil: Report

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A new report from venture capital firm Lattice Fund reveals that more than 80% of crypto startups that raised funds in 2022 are still operational, even in the face of significant market collapses.

According to the October 1 report, over 1,200 startups secured a collective $5 billion in funding during 2022. Of those, 76% successfully launched their products on the mainnet, while 18.5% have either become inactive or decided to close down.

Eigenlayer: A Success Story

Eigenlayer, an Ethereum re-staking protocol, stands out as one of the most successful ventures, delivering a multibillion-dollar product and executing a strong go-to-market strategy.

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However, Eigenlayer’s achievements are a rare success story among the 2022 startups. According to Lattice, only 1.5% of these ventures found what they call “Product Market Fit” (PMF), and just 12% managed to secure additional rounds of funding.

Ethereum Dominates

In terms of sectors, infrastructure and centralized finance (CeFi) startups led the way, with 80% of CeFi and 78% of infrastructure projects successfully launching on the mainnet. However, gaming and the metaverse sectors didn’t fare as well, with some of the highest failure rates among all categories.

“Chasing narratives can get you rekt,” remarked Lattice co-founder Regan Bozman, referring to the $700 million invested in gaming seed rounds that often failed to deliver a tangible product.

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Ethereum emerged as the favored layer-1 ecosystem, attracting $1.4 billion in investment across 314 projects, although 18% of those ultimately failed. Bitcoin-based startups, while fewer in number, proved to be highly resilient. All 18 Bitcoin-related projects that secured funding in 2022 are still active today.

On the other hand, Solana-based startups faced greater challenges. Of the $350 million invested in 87 Solana projects, 26% failed to make it into 2024. The collapse of FTX exchange and the steep decline in SOL’s value were among the external factors contributing to these setbacks.

Challenges Ahead for the 2022 Cohort

Despite the encouraging survival rates, Lattice analysts warn that the “2022 vintage” faces significant challenges. A flat market, coupled with a lack of retail participation and a crowded seed-stage space, makes it harder for startups to secure additional funding and achieve market fit.

Moreover, many investors have shifted their focus to newer sectors like decentralized physical infrastructure (DePIN) and artificial intelligence (AI), as well as emerging ecosystems such as Base and Monad.