The market valuation of ERC20 tokens and low volume crypto have started to fall below the $100 million mark amidst an intense market sell-off and increasing regulatory pressure from the U.S. Securities and Exchange Commission (SEC).
VeChain, Bytecoin, Bitcoin Diamond, ICON, and Qtum have fallen the most against the U.S. dollar in the past 12 months, dropping by 99 percent within a year.
The abovementioned tokens dropped substantially more than other tokens on paper because they achieved multi-billion dollar valuations at their peak.
ICON (ICX), for instance, South Korea’s largest crypto project, was worth $4.3 billion at its peak on January 11. Since then, the market cap of ICX has fallen to $98 million, below the $100 million mark.
Carnage
Most tokens and ERC20 projects have not been able to deliver on their overly vague and unrealistic objectives and business models.
Even projects like ICX, which continued to work with the government of Seoul in an attempt to increase the adoption of blockchain technology in South Korea with active developer and investor communities, could not avoid a substantial drop in valuation as capital started to dry out in the crypto sector.
Many projects have been able to secure partnerships and lead initiatives but the output and the results that came out of the partnerships were overwhelming. It is difficult to say that more individuals and businesses are using blockchain technology than a year ago.
DApp developers could argue that Ethereum, Cardano, TRON, ICON, AION, and other base smart contract protocols may have not done enough to create an efficient ecosystem for decentralized applications (dApps) and systems.
But, dApps could not bring enough people to utilize the blockchain to test the capacity of the base smart contract protocols to begin with, possibly due to user interface (UI) and user experience (UX) limitations.
As Vitalik Buterin, the co-creator of Ethereum, explained, there still exists many non-financial applications of the blockchain that are yet to be tested. He said:
“Another category of use cases is verifying integrity of processes. For example, in an auction, you might want to verify that everyone’s bid that was submitted on time was included, and no late bids were included. If bids are published to chain, even encrypted, you can do this. There are also many categories of use cases where different applications need to be on a common database, and it’s just more convenient (or less risk of capture) if it’s a credibly neutral platform. Supply chain tracing stuff theoretically falls here.”
Crypto Bear Market Shake Out
In a bear market, investors tend to realize that the market has been over-valued, pulling the prices of cryptocurrencies further down, substantially. Then, as the market recovers, developers continue to build more products to support the next wave of users and investors.
Technologies that fueled the 2017 rally were certainly better than the projects that were around in 2014 as they showed the capability of the blockchain to demonstrate flexible use cases outside of finance.
But, without actively used products, it was not enough to justify multi-billion dollar valuations for tokens and as a consequence, the market suffered a large crash with many tokens losing 99 percent of its value.
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