Token Model Under Pressure In Crypto Industry

The crypto market shows deceptive resilience. Behind a stable overall capitalization, a much more worrying reality is emerging: the value of tokens erodes as their number explodes. This imbalance, pointed out by several industry figures, questions the very ability of tokens to capture the value they claim to represent. Between massive dilution and falling yields, the industry faces a structural flaw that could permanently redefine its functioning.

An Explosion of Supply Dilutes Value

While the crypto market stagnates in extreme fear, Michael Ippolito, co-founder of Blockworks, warns of a major imbalance between token creation and value creation. He sums up this drift with a clear formula: “the average value of cryptos is barely higher than that of 2020 (!) and has dropped about 50 % since 2021”. He also insists on a central phenomenon : “we have created a ton of new assets yet the total market capitalization remains stable”.

This dynamic is concretely reflected by several striking observations :

• The average value of tokens has stagnated since 2020 ;
• A decline of about 50 % since 2021 ;
• Median yields falling about 80 % from the peaks ;
• Total capitalization that does not increase despite the multiplication of assets.

These elements reflect a progressive dilution of value, linked to an ever more abundant supply that does not meet equivalent demand.

A Break in the Token Model and a Shift of Capital

Beyond the simple issue of supply, another phenomenon worries observers: the growing disconnection between project fundamentals and their tokens’ price. While on-chain revenues are rising again, valuations no longer follow this trend.

For Ippolito, this signal is critical: “the token problem constitutes an existential threat to the industry”. This break suggests that tokens no longer fulfill their original role of value capture, calling their economic utility into question.

This analysis is shared by Arthur Cheong, founder of DeFiance Capital, who speaks of “the urgent need to correct the current token situation in the crypto industry”. He warns of a market concentration risk around a few dominant assets like bitcoin and Ether, to the detriment of the rest of the ecosystem.

At the same time, data from DWF Labs confirms an important trend : over 80 % of projects trade below their launch price, with typical drops of 50 % to 70 % in only three months. This phenomenon is partly explained by continuous selling pressure related to airdrops and token unlocks for early investors.

Faced with these dynamics, part of the capital is redirected towards publicly traded crypto companies, seen as more transparent and potentially less exposed to this dilution. This gradual flow shift could mark a lasting transformation of the market, where value would no longer be primarily captured via tokens. The industry thus finds itself at a tipping point, forced to rethink its value creation and distribution mechanisms to preserve its long-term credibility.