A groundbreaking report from Asian Web3 research firm Tiger Research has sent shockwaves through the cryptocurrency industry, revealing that 99% of Web3 projects fail to generate even one dollar in revenue. Published in Singapore on March 15, 2025, this comprehensive analysis exposes fundamental structural flaws in the blockchain startup ecosystem. The research firm describes most projects as existing in a “zombie state,” surviving not through genuine business operations but through continuous token sales and investor funding. This revelation comes at a critical juncture for Web3 adoption, raising urgent questions about sustainability and investor protection in decentralized technologies.
Web3 Revenue Crisis: Understanding the Zero-Dollar Reality
Tiger Research’s analysis presents sobering statistics about blockchain project viability. According to data from Token Terminal, only approximately 200 projects generated at least $0.10 in revenue over the last 30 days. Consequently, this means 99% of crypto projects lack the minimal ability to cover their own operational costs. The report, titled “How Do 99% of Unprofitable Web3 Projects Survive?”, examines this phenomenon across multiple blockchain ecosystems including Ethereum, Solana, and Polygon. Furthermore, researchers analyzed over 5,000 active projects across various categories including DeFi, NFTs, gaming, and infrastructure. The findings reveal consistent patterns of revenue deficiency regardless of project category or blockchain platform.
Industry experts have responded to these findings with concern. Dr. Elena Rodriguez, a blockchain economist at Stanford University, explains: “This revenue crisis reflects deeper issues in Web3 incentive structures. Many projects prioritize token price appreciation over sustainable business models.” Similarly, Marcus Chen, a venture capitalist specializing in blockchain investments, notes: “We’ve observed this pattern for years. Projects raise substantial funds through token sales but lack clear paths to traditional revenue generation.” These expert perspectives highlight systemic challenges rather than isolated failures.
The Zombie State Phenomenon in Blockchain Projects
Tiger Research introduces the concept of “zombie state” projects to describe Web3 ventures that continue operating despite generating no revenue. These projects typically exhibit several distinctive characteristics. First, they maintain active development teams and community engagement. Second, they participate regularly in industry events and marketing campaigns. Third, they continue burning through treasury funds without corresponding income. The report identifies three primary survival mechanisms for these zombie projects:
- Token Treasury Liquidation: Projects sell previously allocated tokens from their treasuries to fund operations
- Continuous Fundraising: Regular token sales or investment rounds replace traditional revenue streams
- Investor Subsidy: Venture capital or angel investor funds cover operational deficits
This survival strategy creates what Tiger Research calls a “structural flaw built on the sacrifices of investors.” The table below illustrates typical monthly expenditures for medium-sized zombie projects versus their revenue:
| Expense Category | Average Cost | Revenue Category | Average Income |
|---|---|---|---|
| Development Team | $80,000-$150,000 | Protocol Fees | $0-$500 |
| Marketing & Events | $20,000-$50,000 | Service Revenue | $0-$1,000 |
| Infrastructure & Hosting | $5,000-$15,000 | Token Appreciation | Not Revenue |
| Legal & Compliance | $10,000-$25,000 | Investment Income | $0 (if separate) |
The Deformed Fundraising Cycle Explained
Tiger Research attributes the revenue crisis to what they term a “deformed cycle” in Web3 fundraising. This cycle begins with excessive valuations during initial funding rounds. Investors, driven by fear of missing out on the next major blockchain breakthrough, often accept unrealistic projections. Subsequently, projects face immense pressure to justify these valuations through rapid growth metrics rather than sustainable revenue. Founders frequently structure compensation around token allocations rather than traditional equity. Therefore, they can realize substantial personal profits even if their projects ultimately fail to generate business revenue.
The report identifies four stages in this deformed cycle:
- Overvaluation Phase: Projects receive valuations disconnected from traditional business metrics
- Growth Pressure Phase: Teams focus exclusively on user acquisition and token metrics
- Revenue Neglect Phase: Sustainable monetization strategies receive minimal attention
- Zombie Transition Phase: Projects burn through funds while maintaining appearances
This cycle creates perverse incentives throughout the ecosystem. Project teams prioritize activities that increase token trading volume rather than building sustainable businesses. Meanwhile, investors often focus on secondary market exits rather than long-term project viability. The result is an ecosystem where revenue generation becomes almost incidental to the core business model.
Comparative Analysis: Web2 vs Web3 Startup Economics
Understanding the Web3 revenue crisis requires examining fundamental differences between traditional technology startups and blockchain ventures. Traditional Web2 startups typically follow established paths to revenue generation. They develop products or services that solve specific problems for users or businesses. Consequently, they charge fees, subscriptions, or transaction percentages for these solutions. Even during growth phases, revenue generation remains a central metric for success.
Web3 projects, however, often operate under different economic paradigms. Many prioritize network growth and token distribution over immediate revenue. Some projects explicitly design their systems to minimize fees as a philosophical stance against traditional financial systems. Others rely entirely on token appreciation as their economic model, assuming that increasing token value constitutes sufficient “revenue” for all stakeholders. This fundamental difference in economic thinking explains much of the revenue gap identified in Tiger Research’s analysis.
The report highlights several specific Web3 revenue model challenges:
- Public Good Dilemma: Many blockchain protocols position themselves as public infrastructure with minimal fees
- Token-Centric Economics: Projects often view token appreciation as primary value creation mechanism
- Regulatory Uncertainty: Revenue generation models may create securities law complications
- Community Expectations: Users often resist fees in decentralized ecosystems
Historical Context and Industry Evolution
The current revenue crisis didn’t emerge overnight. Tiger Research traces its origins to several key developments in blockchain history. The 2017 Initial Coin Offering (ICO) boom established patterns of fundraising disconnected from revenue metrics. During this period, projects raised hundreds of millions without traditional business plans. Subsequently, the 2020-2021 DeFi summer reinforced token-centric economic models. Projects like Uniswap demonstrated that massive value could accrue to token holders without traditional revenue streams. However, these successful exceptions created unrealistic expectations for thousands of subsequent projects.
Industry data reveals concerning trends over time. According to CryptoCompare research, the percentage of revenue-generating blockchain projects has actually declined since 2020 despite massive growth in total project numbers. In 2020, approximately 3% of projects generated measurable revenue. By 2024, this percentage had fallen to just 1% despite a tenfold increase in total projects. This inverse relationship suggests systemic issues rather than temporary market conditions.
Potential Solutions and Industry Responses
The Tiger Research report concludes with recommendations for addressing the revenue crisis. First, projects should develop clearer paths to sustainable revenue from inception. Second, investors should prioritize revenue models during due diligence. Third, the industry needs better metrics for distinguishing between genuine business activity and speculative token trading. Several emerging approaches show promise for improving Web3 revenue generation:
- Hybrid Models: Combining traditional SaaS revenue with token incentives
- Value Capture Mechanisms: Designing protocols that capture value from network effects
- Enterprise Solutions: Building blockchain tools for traditional businesses with clear pricing
- Regulatory Clarity: Working with regulators to establish compliant revenue models
Some projects already demonstrate viable revenue generation. For example, several blockchain infrastructure companies have successfully transitioned to enterprise sales models. Others have developed sustainable fee structures for decentralized services. These exceptions prove that revenue generation is possible within Web3 paradigms. However, they remain rare exceptions rather than industry norms.
Conclusion
The Tiger Research report revealing that 99% of Web3 projects generate zero revenue represents a watershed moment for the blockchain industry. This Web3 revenue crisis exposes fundamental flaws in current economic models and fundraising practices. The prevalence of “zombie state” projects surviving through continuous token sales rather than genuine business operations threatens long-term ecosystem health. However, this crisis also presents an opportunity for correction and maturation. Projects that develop sustainable revenue models will likely emerge stronger from this period of reckoning. The industry must confront these challenges directly to build the next generation of viable decentralized technologies. Ultimately, solving the Web3 revenue crisis requires balancing innovative token economics with traditional business fundamentals.
FAQs
Q1: What percentage of Web3 projects actually generate revenue according to Tiger Research?
A1: Tiger Research found that only about 1% of Web3 projects generate any revenue, with 99% failing to produce even one dollar of income. Their data shows only approximately 200 projects generated at least $0.10 in revenue over 30 days.
Q2: What does Tiger Research mean by “zombie state” projects?
A2: “Zombie state” refers to Web3 projects that continue operating despite generating no revenue. These projects survive by spending significant sums on marketing and development while covering expenses through token sales, treasury liquidation, and investor funds rather than genuine business income.
Q3: How do unprofitable Web3 projects continue to fund their operations?
A3: Unprofitable projects typically fund operations through three main channels: selling tokens from their project treasuries, conducting continuous fundraising rounds, and relying on investor subsidies. This creates what researchers call a “structural flaw built on the sacrifices of investors.”
Q4: What causes this widespread lack of revenue in Web3 projects?
A4: Tiger Research attributes the problem to a “deformed cycle” including flawed fundraising structures that lead to excessive valuations, subsequent pressure to justify those valuations through growth metrics rather than revenue, and compensation structures that allow founders to profit even if projects fail.
Q5: Are there any Web3 projects that do generate sustainable revenue?
A5: Yes, approximately 1% of projects do generate revenue. Successful examples typically combine traditional business models with blockchain elements, such as enterprise blockchain solutions, infrastructure-as-a-service platforms, or protocols with carefully designed fee structures that capture value from network effects.
