Writing by: Ryan Yoon, Tiger Research
Translation: Saoirse, Foresight News
99% of Web3 projects have no cash income, yet many companies still invest huge sums monthly in marketing and events. This article will delve into the survival rules of these projects and the truth behind “burning money.”
Key Points
99% of Web3 projects lack cash flow, relying on tokens and external funding for expenses rather than product sales.
Going public (token issuance) too early causes marketing expenses to surge, weakening the competitiveness of core products.
The reasonable P/E ratio of the top 1% projects proves that the rest lack actual value support.
Early Token Generation Events (TGE) allow founders to realize “exit liquidity” regardless of project success or failure, creating a distorted market cycle.
The “survival” of 99% of projects fundamentally stems from systemic flaws built on investor losses rather than corporate profits.
Prerequisite for survival: verified revenue-generating ability
“The prerequisite for survival is verified revenue-generating ability” — this is the most critical warning in the current Web3 space. As the market matures, investors no longer blindly chase vague “visions.” If a project cannot attract real users and generate actual sales, token holders will quickly sell off and exit.
The key issue is “funding turnover period,” i.e., how long a project can sustain operations without profitability. Even without sales, costs like salaries and server fees require fixed monthly expenses, and teams with no income have almost no legitimate channels to maintain operational funds.
Funding costs without income:
However, this “relying on tokens and external funds to survive” model is only a stopgap. Assets and token supplies have clear limits. Ultimately, projects that exhaust all funding sources will either cease operations or quietly exit the market.
Web3 Revenue Ranking, source: token terminal and Tiger Research
This crisis is widespread. According to Token Terminal data, only about 200 Web3 projects worldwide have had revenue of at least $0.10 in the past 30 days.
This means 99% of projects lack the ability to even cover their basic costs. In short, almost all crypto projects have failed to validate the feasibility of their business models and are gradually declining.
Valuation Traps
This crisis was largely inevitable. Most Web3 projects go public (token issuance) based solely on “visions,” without even having a real product. This contrasts sharply with traditional companies — before an IPO, they must prove growth potential; in Web3, teams often need to justify high valuations only after going public (TGE).
But token holders won’t wait indefinitely. As new projects emerge daily, if a project fails to meet expectations, holders will sell off quickly. This puts downward pressure on token prices and threatens project survival. Therefore, most projects invest more in short-term hype rather than long-term product development. Clearly, if the product itself lacks competitiveness, even intensive marketing will eventually fail.
At this point, projects fall into a “dilemma trap”:
Focusing solely on product development: requires a lot of time, during which market attention will gradually fade, and funding turnover periods will shorten;
Focusing only on short-term hype: makes the project hollow and lacking real value support.
Both paths ultimately lead to failure — the project cannot justify its initial high valuation and will eventually collapse.
Seeing the Truth of 99% of Projects Through the Top 1%
However, 1% of top projects prove the viability of the Web3 model with massive revenue.
We can assess their value through the P/E ratio (PER) of leading profit-generating projects like Hyperliquid, Pump.fun, etc. The P/E ratio is calculated as “market cap ÷ annual revenue,” reflecting whether the project’s valuation is reasonable relative to actual income.
P/E comparison: Top Web3 projects (2025):
Note: Hyperliquid’s sales are based on annualized estimates since June 2025.
Data shows that profitable projects have P/E ratios ranging from 1 to 17. Compared to the S&P 500 average P/E of about 31, these top Web3 projects are either “undervalued relative to sales” or have “excellent cash flow.”
Top projects with actual revenue can maintain reasonable P/E ratios, which makes the valuations of the remaining 99% appear unjustified — directly proving that most projects in the market are overvalued without solid real value support.
Can this distorted cycle be broken?
Why do projects with no sales still maintain valuations of billions of dollars? For many founders, product quality is secondary — the twisted structure of Web3 makes “quick exit liquidity” much easier than “building a real business.”
The cases of Ryan and Jay perfectly illustrate this: both launched AAA-level game projects, but their outcomes were vastly different.
Founder differences: Web3 vs. traditional models
Ryan: Choosing TGE, abandoning deep development
He chose a path centered on “profitability”: before the game launched, he raised early funds by selling NFTs; then, while the product was still in rough development, he held a token generation event (TGE) based on a bold roadmap, and listed on a mid-tier exchange.
After listing, he maintained token prices through hype, buying time for himself. Although the game was delayed, the product quality was poor, and holders sold off en masse. Ryan ultimately resigned citing “taking responsibility,” but he was actually the real winner in this game —
On the surface, he appeared focused on work, but in reality, he took a high salary and profited massively by selling unlocked tokens. Regardless of the project’s final outcome, he quickly accumulated wealth and exited the market.
Conversely, Jay: Following the traditional path, focusing on the product itself
He prioritized product quality over short-term hype. But AAA game development takes years, and during this period, his funds gradually depleted, leading to a “funding crisis.”
In the traditional model, founders wait until the product is launched and sales are achieved before earning significant profits. Jay raised funds through multiple rounds of financing, but ultimately, due to lack of funds, he shut down the company before the game was completed. Unlike Ryan, Jay did not profit and left behind massive debts, marking a failure.
Who is the real winner?
Both cases did not produce successful products, but the winner is obvious: Ryan accumulated wealth by exploiting the distorted valuation system of Web3, while Jay lost everything trying to build a quality product.
This is the brutal reality of the current Web3 market: taking early exits with overvalued assets is much easier than building sustainable business models; ultimately, the cost of this “failure” is borne entirely by investors.
Returning to the initial question: “How do 99% of unprofitable Web3 projects survive?”
This harsh reality is the most honest answer to that question.
