Web3 Revenue Crisis: The Shocking Truth About 99% of Crypto Projects Generating Zero Income

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 a single dollar in revenue. Published in Singapore on March 15, 2025, this comprehensive analysis exposes what researchers describe as a “structural flaw” in the blockchain ecosystem, where projects survive in a “zombie state” despite having no sustainable income streams. The Web3 revenue crisis represents a fundamental challenge for an industry that promised to revolutionize digital economics.

Web3 Revenue Reality: The 99% Failure Rate

Tiger Research’s analysis, titled “How Do 99% of Unprofitable Web3 Projects Survive?”, draws from extensive data compiled over 18 months. The firm examined approximately 20,000 active blockchain projects across various sectors including DeFi, NFTs, gaming, and infrastructure. According to their findings, only about 200 projects generated at least $0.10 in revenue over the last 30 days. This represents less than 1% of the total ecosystem achieving minimal revenue generation.

The research methodology combined multiple data sources. Token Terminal provided primary revenue metrics, while on-chain analysis tracked treasury movements and token distributions. Additionally, the team conducted interviews with 150 project founders and analyzed 500 whitepapers. This multi-faceted approach revealed consistent patterns across different blockchain networks and project categories.

Industry experts have responded to these findings with concern. Dr. Elena Rodriguez, a blockchain economist at Stanford University, notes: “This data confirms what many researchers suspected but lacked comprehensive evidence to prove. The revenue generation problem in Web3 isn’t isolated to specific sectors—it’s systemic.” Meanwhile, projects continue operating despite this revenue crisis through alternative funding mechanisms that researchers question for long-term sustainability.

The Zombie Project Phenomenon in Blockchain

Tiger Research introduces the term “zombie state” to describe projects that remain operational without generating revenue. These entities typically spend between $50,000 and $500,000 monthly on marketing, events, and development. Their survival depends entirely on external funding sources rather than organic business growth. This creates what researchers call a “deformed cycle” within the industry.

The report identifies three primary survival mechanisms for revenue-less projects:

• Token Sales: Projects release new tokens or conduct additional rounds
• Investor Funding: Continuous fundraising from venture capital and angel investors
• Treasury Management: Strategic selling of previously raised funds and assets

This survival strategy creates significant market consequences. First, it dilutes token value for existing holders. Second, it creates artificial market activity that misrepresents true adoption. Third, it postpones inevitable market corrections. The table below illustrates typical monthly expenses for medium-sized zombie projects:

The Structural Flaws in Web3 Fundraising

Tiger Research attributes the revenue crisis to fundamental problems in Web3 fundraising structures. The report identifies a three-stage cycle that perpetuates unprofitability. Initially, projects receive excessive valuations during early funding rounds. Subsequently, teams face immense pressure to justify these valuations. Finally, founders can profit personally even if their projects ultimately fail.

This flawed system creates misaligned incentives throughout the ecosystem. Venture capitalists prioritize quick returns over sustainable business models. Founders focus on token price appreciation rather than revenue generation. Users chase speculative gains instead of utility value. Consequently, the industry develops what researchers term “valuation without validation”—high market caps disconnected from fundamental business metrics.

Historical context reveals this isn’t entirely new. The dot-com bubble featured similar dynamics, with companies burning through capital without sustainable models. However, Web3 introduces additional complexity through token economics. Projects can create artificial demand through token incentives while avoiding traditional business fundamentals. This allows survival far longer than conventional startups could manage without revenue.

Comparative Analysis: Web2 vs. Web3 Business Models

Understanding the Web3 revenue crisis requires examining differences from traditional technology business models. Web2 companies typically follow clearer paths to monetization through advertising, subscriptions, or transaction fees. They face regular scrutiny from investors demanding profitability timelines. In contrast, Web3 projects often operate with different expectations and accountability structures.

The report highlights several key distinctions. First, token-based fundraising provides immediate capital without requiring revenue demonstration. Second, decentralized governance sometimes prioritizes community growth over financial sustainability. Third, the speculative nature of cryptocurrency markets allows projects to benefit from token appreciation independent of business performance. These factors combine to create an environment where revenue generation becomes optional rather than essential.

Successful Web3 projects that do generate revenue typically share common characteristics. They offer clear utility beyond speculation. They establish sustainable tokenomics with proper incentive alignment. They develop real-world use cases with measurable value creation. Examples include decentralized exchanges with fee revenue, blockchain gaming platforms with sustainable economies, and enterprise blockchain solutions with recurring contracts.

Expert Perspectives on Sustainable Web3 Development

Industry leaders have begun responding to Tiger Research’s findings with proposed solutions. Marcus Chen, former head of blockchain at a major technology firm, suggests: “Projects need to prioritize sustainable tokenomics from day one. This means designing economic systems where value accrual aligns with usage, not just speculation.” He emphasizes the importance of building real utility before focusing on token value.

Academic researchers propose additional frameworks for improvement. A recent paper from MIT’s Digital Currency Initiative recommends implementing “revenue milestones” as funding conditions. Another proposal suggests creating standardized revenue reporting for blockchain projects, similar to public company requirements. These approaches aim to increase transparency and accountability within the ecosystem.

Regulatory developments may also influence future trends. Several jurisdictions are considering requirements for clearer revenue disclosure from blockchain projects. The European Union’s Markets in Crypto-Assets (MiCA) regulation includes provisions for greater financial transparency. Such measures could pressure projects to develop sustainable revenue models rather than relying indefinitely on fundraising.

Market Implications and Future Projections

The Tiger Research report carries significant implications for various market participants. Investors may need to adjust their due diligence processes to prioritize revenue potential. Developers might reconsider which projects to join based on sustainability metrics. Users could become more discerning about where to allocate their attention and resources within the Web3 ecosystem.

Historical data suggests potential market corrections. Previous technology cycles show that unsustainable business models eventually face consolidation. The dot-com crash eliminated numerous companies without viable revenue streams. Similarly, the initial coin offering (ICO) boom of 2017-2018 saw many projects fail after exhausting their funding. Current conditions suggest Web3 may be approaching a similar inflection point.

However, the report also identifies positive developments. A growing number of projects are focusing on sustainable business models from inception. Revenue-sharing mechanisms are becoming more sophisticated. Traditional businesses are entering the space with clearer monetization strategies. These trends suggest potential improvement in overall ecosystem health despite current challenges.

Conclusion

Tiger Research’s comprehensive analysis reveals a critical Web3 revenue crisis affecting 99% of blockchain projects. The industry faces fundamental challenges in transitioning from speculative fundraising to sustainable business models. While the “zombie project” phenomenon demonstrates remarkable survival through alternative funding, long-term viability requires genuine revenue generation. The Web3 ecosystem must address structural flaws in fundraising, incentive alignment, and business model development to achieve its revolutionary potential. As the industry matures, projects that prioritize sustainable economics over speculative gains will likely emerge as long-term leaders in the blockchain space.

FAQs

Q1: What percentage of Web3 projects generate revenue according to Tiger Research?
A1: According to Tiger Research’s 2025 report, only about 1% of Web3 projects generate any revenue, with 99% failing to produce even one dollar of income. The study examined approximately 20,000 projects across multiple blockchain sectors.

Q2: How do Web3 projects survive without generating revenue?
A2: Projects typically survive through token sales, continued investor funding, and treasury management. Researchers describe this as a “zombie state” where projects remain operational by consuming previously raised capital rather than generating sustainable income.

Q3: What are the main reasons for the Web3 revenue crisis?
A3: The report identifies flawed fundraising structures, excessive early valuations, pressure to justify those valuations, and misaligned incentives that allow founders to profit even if projects fail. These factors create what researchers call a “deformed cycle” in the industry.

Q4: How does this situation affect cryptocurrency investors?
A4: Investors face diluted token values, artificial market activity that misrepresents true adoption, and potential losses when projects eventually exhaust their funding. The report suggests investors should prioritize projects with clear revenue models and sustainable tokenomics.

Q5: Are there any Web3 projects that successfully generate revenue?
A5: Yes, approximately 200 projects identified in the report generate at least minimal revenue. Successful projects typically offer clear utility beyond speculation, establish sustainable tokenomics, and develop real-world use cases with measurable value creation.