70 crypto projects shut down, filed for bankruptcy, announced closures, or became inactive during the first half of 2026, according to RootData tracking. The shutdowns occurred as crypto startups ran out of room to survive on narrative, token incentives and venture capital alone. The cleanup represents one of the sharpest contractions in the crypto industry since the last bear market, affecting projects across DeFi, NFTs, blockchain gaming, Layer 2 networks, wallets, infrastructure, media and DAO tooling.
RootData Tracks 70 Project Closures Across Multiple Sectors
RootData's tracking includes projects that announced a shutdown, projects that entered bankruptcy, and projects whose websites remained unavailable for long enough to be treated as inactive. The list includes Loopring, Goldfinch, NFTfi, Nifty Gateway, Foundation, ZeroLend, Ionic, Rage Trade, Botanix, Over Protocol, Zero Network, Leap Wallet, Dmail, Step Finance, MilkyWay, Fantasy Top and Parsec. The number does not represent 70 formal insolvency filings, as RootData's category is broader than bankruptcy proceedings alone.
Venture-Backed Projects Raised $87 Million Before Shutdowns
Yupp, Syndicate Labs and Entropy collectively raised about $87 million from a16z-linked funding rounds before shutting down, according to reports based on RootData's list. Yupp raised $33 million and reportedly attracted nearly 1.3 million users, but user growth did not translate into sustainable revenue. Syndicate Labs raised $27.8 million to build DAO infrastructure, only to face weaker demand for DAO tooling as the sector lost momentum. Entropy, a decentralized custody startup, raised nearly $27 million but failed to reach product-market fit and closed earlier this year.
FinanceFeeds previously reported that Digital Asset targeted a $2 billion valuation in a funding round led by a16z, while Andreessen Horowitz was seeking a fifth crypto fund.
Shutdowns Affect DeFi, NFT, Gaming And Infrastructure Projects
NFT platforms have struggled with declining trading activity. DeFi protocols have faced lower total value locked, weaker fee generation and reduced token incentives. DAO tooling companies have been hit by weaker demand for governance infrastructure. Blockchain gaming projects have struggled to convert users into sustainable revenue.
Strobe Finance shut down after falling TVL and weak funding conditions. Fishing Frenzy closed after failing to find product-market fit in Web3 gaming. Sophon shut down its own Layer 2 and moved to Base, citing the cost of maintaining separate infrastructure. Satori Finance shut down despite $13.4 billion in perpetuals volume. Botanix shut down its Bitcoin Layer 2 after concluding that user demand and fee revenue were not enough to sustain the network.
Spot Crypto ETFs Return To Inflows In Early July
FinanceFeeds reported that spot crypto ETFs returned to inflows in early July, led by Bitcoin products. Capital has moved toward Bitcoin, large-cap tokens, ETFs and regulated market infrastructure, leaving smaller startups fighting for liquidity and attention. That type of flow supports the largest assets and regulated wrappers, but it does little for smaller DeFi, NFT, gaming, wallet or infrastructure projects that need active users, protocol fees and fresh venture funding to survive.
The result is a two-speed market. Bitcoin and institutional crypto products can attract capital even during volatile periods, while smaller projects are being forced to prove they have real revenue. Projects that relied on token rewards, speculative user activity, governance participation, NFT trading or grant funding have become more vulnerable.
Revenue Replaces User Count As Survival Metric
Several projects that attracted communities, transaction activity, or venture backing still failed because they could not convert usage into revenue. Investors are asking harder questions: who pays, how often, what is the gross margin, how much runway remains, and can the product survive without token subsidies.
The failures of FTX, Celsius, BlockFi and Voyager were tied to leverage, fraud allegations, balance-sheet failures and centralized lending risk. The 2026 shutdowns are more often ordinary business failures. The products may not be scams. They may simply be too expensive to maintain, too small to monetize, or too early for the market they were trying to create.
FAQ
What caused 70 crypto projects to shut down in the first half of 2026?
Crypto startups ran out of room to survive on narrative, token incentives and venture capital alone, according to RootData tracking. Projects failed to convert user growth into sustainable revenue, while capital shifted toward Bitcoin, large-cap tokens, ETFs and regulated market infrastructure.
How much funding did failed crypto projects raise before shutting down?
Yupp, Syndicate Labs and Entropy collectively raised about $87 million from a16z-linked funding rounds before shutting down, according to reports based on RootData's list. Yupp raised $33 million, Syndicate Labs raised $27.8 million, and Entropy raised nearly $27 million.
