Up to 90% of blockchain technology initiatives within startup businesses will inevitably fail,
- study from the University of Surrey.
Blockchain promised to change the world—decentralized finance, transparent systems, and trustless transactions. However, not all blockchain dreams reach the moon. Many crash and burn.
![Failed Blockchain Projects]()
In this post, we’ll explore real examples of blockchain projects that failed and what developers and founders can learn from their missteps.
Professor Yu Xiong, co-author of the study from the University of Surrey, said:
"We discovered that the effectiveness of blockchain adoption is not just about technology but is deeply rooted in the management behaviours of founders. In short, blockchain companies may need its own “founder mode” moment to survive.
"Strong leadership can transform a nascent idea into a thriving business, while weak governance can doom even the most innovative projects to failure.
“The way decisions are made in these companies can be problematic. Some founders let everyone have a say, which sounds good, but it can lead to confusion and slow progress. For example, if a team can't agree on a new feature for their blockchain service, they might waste time debating instead of moving forward."
Before we proceed, here are some stats from coingecko
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![Crypto Coin Failures 2025]()
| Year of Launch |
Number of Dead Coins |
| 2021 |
2,584 |
| 2022 |
213,075 |
| 2023 |
245,049 |
| 2024 |
1,382,010 |
| 2025 |
1,821,549 |
1. Mt. Gox – The Legendary Collapse
What it was
Originally a trading platform for Magic: The Gathering cards, Mt. Gox became the world’s largest Bitcoin exchange by 2013, handling over 70% of all BTC transactions globally.
What went wrong
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Poor codebase and lack of internal controls
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Weak security practices (private keys stored unencrypted)
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Lost over 850,000 BTC due to hacks and theft
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Zero transparency with users and regulators
Lesson for developers
Security is not optional in blockchain. Protect private keys, conduct code audits, and never scale without rock-solid infrastructure.
2. Terra (LUNA) & UST – The Algorithmic Stablecoin Disaster
What it was
Terra’s UST was a decentralized, algorithmic stablecoin designed to maintain a $1 peg through a burn-mint mechanism with LUNA.
What went wrong
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A death spiral: When UST lost its peg, panic led to massive LUNA minting to restore balance, resulting in hyperinflation.
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Over $45 billion in market value was wiped out in just a few days.
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No real collateral backing UST.
Lesson for developers
Don’t build on fragile economic models. Simulate edge-case scenarios and stress-test algorithms with real-world attack vectors in mind.
3. BitConnect – The Ponzi with a Token
What it was
BitConnect offered insane returns (up to 1% per day) through a “trading bot.” It had its own BCC token and a slick referral program.
What went wrong
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No transparency about how the bot worked
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Classic Ponzi structure: early users paid from later deposits
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Shut down by regulators in 2018, the BCC token dropped 99%
Lesson for developers
Hype isn’t a substitute for value. Avoid working on projects that promise unrealistic gains or hide technical operations. If it sounds too good to be true—it probably is.
4. The DAO – Ethereum’s Infamous Fork Trigger
What it was
In 2016, the DAO was a decentralized investment fund built on Ethereum. It raised over $150 million in ETH—unprecedented at the time.
What went wrong
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A vulnerability in the smart contract allowed recursive calls to drain funds.
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Hacker siphoned off ~$60 million in ETH
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Led to a controversial Ethereum hard fork (ETH and ETC split)
Lesson for developers
Smart contracts are immutable and unforgiving. Always audit your code, use formal verification when possible, and follow the principle of least privilege.
5. OneCoin – The Crypto That Never Existed
What it was
A supposed crypto project led by “Cryptoqueen” Dr. Ruja Ignatova. It marketed itself as the next Bitcoin.
What went wrong
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No actual blockchain existed
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Operated as a multi-level marketing scheme
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Raised over $4 billion before being shut down
Lesson for developers
Blockchain projects must be blockchain projects. As a developer, do due diligence before joining any team—ask for whitepapers, repos, and proofs of concept.
6. EOS – Billion-Dollar ICO, Little to Show
What it was
EOS raised over $4 billion in the biggest ICO ever. It promised high-speed decentralized apps with zero fees.
What went wrong
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Centralized governance: Block producers held too much power
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Poor developer tooling and limited adoption
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Slow delivery of promised features
Lesson for developers
A big war chest doesn’t guarantee product-market fit. Prioritize community, tooling, and real-world use cases over hype.
Common Patterns Behind Blockchain Failures
Across these examples, a few recurring themes emerge:
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Security negligence: Whether it’s poor smart contract audits or private key management, a lack of cybersecurity kills projects fast.
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Unrealistic promises: Many failed projects sold visions without delivering working products.
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Poor governance: Centralized control in decentralized systems leads to trust issues and fragmentation.
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Lack of transparency: If users and developers can’t see the code, mechanics, or roadmap, they’ll lose confidence quickly.
Closing Thoughts
Blockchain is powerful—but it’s not magic. As developers, we’re on the frontlines of building trustless, decentralized apps. The failures above aren’t just history lessons—they’re warnings.
So before you write that next smart contract or contribute to a new protocol, ask yourself:
“Are we solving a real problem—or just riding the hype?”
Because in blockchain, code is law, and history remembers bugs more than promises.