2026 becomes the year of crypto shutdowns as liquidity repositions

Crypto project shutdowns accelerated in 2026, mostly affecting Web3 projects. The ongoing bear market led to an outflow of users as liquidity repositioned. 

Crypto project shutdowns accelerated in H1, with dozens of both large and small shutdowns for the year. The shutdowns range from sundowning projects due to a lack of users or bankruptcies. Some projects shut down after exploits, where they failed to recover the funds and raise new liquidity. 

According to Cryptorank, 17 notable projects shut down in 2026 to date. Those projects raised $8.9B in disclosed funding, but failed to make a difference in the crypto economy. 

Why are crypto project shutdowns accelerating?

The recent outflow of projects repeats similar patterns from previous bear markets. In 2026, the shutdowns were partially due to consolidation, as a handful of products became the main activity venues. Smaller copycat projects or competitive platforms could not justify their existence and failed to attract enough users. 

Web3 projects in 2026 also suffered from slower token trading, as users shifted their liquidity to tokenized equities or perpetual futures trading. The model of crypto startups, which promised token appreciation after the initial raise, did not work during the 2026 bear market. 

Web3 products also failed to retain users beyond their initial airdrop stage. Some products shut down after abandoning trends such as NFT marketplaces. Other projects became insolvent, despite the large initial raises. Currently, several legacy ICOs still retain large ETH treasuries, allowing them to have passive earnings as validators. 

This time around, the shutdowns and bankruptcies surpassed even the 2022 wave of defunct projects. However, the shutdowns did not have repercussions on the rest of the ecosystem, as in the case of FTX and Terra (LUNA). 

As Cryptopolitan reported, some of the shutdowns involved barely used infrastructure and new chains. The recently announced Bitmex shutdown was due to the inability to find a buyer and continue the market’s operations. SecondFi App shut down after a high-profile wallet exploit in June.

Wallets are also winding down, with Magic Eden wallet sunsetting in Q1, and CTRL Wallet running until August. 

A total of 95 projects shut down in 2026

According to Rootdata, a total of 95 projects have shut down in 2026 to date. The latest shutdowns include HaHa wallet and Zero Network, a L2 chain with zero fees. Even promising chains like Polygon ZK-EVM shut down after a period with minimal users. 

The projects spanned multiple sectors and narratives, including DeFi, SocialFi, asset management, and stablecoin minting. The recent wave of shutdowns also showed there was only enough space for a handful of leading projects in crypto. 

Projects that relied on constant funding and new launches also slowed down, as in the case of the Celestia ecosystem and some AI launch platforms. Some projects had a good product-market fit and enough users, but could not survive the bear market cycle, according to analysis from the Gate exchange.

Crypto has always retained the highest failure rate of all startup categories, with up to 95% of projects failing. On average, crypto projects have been found to run for 2.3 years. 

The recent wave of shutdowns is also seen as a potential signal for the lowest point of the bear market. The wave of quick launches and cash grabs was over, leaving only the most useful on-chain tools and use cases.