More than 80% of tokens launched this year are traded underwater, marking a definitive shift in market demand for venture-backed cryptocurrency projects.
Facts from Memento Research has shown that it has tracked 118 major token generation events in 2025 and found that 100 of them, or 84.7%, are trading below their fully diluted opening value. At the same time, the median token in that cohort is down 71% from its launch price.
According to the company:
“TGE in 2025 often meant the top for most projects, with price development already happening before TGE. If you buy at launch you are essentially chasing rare outliers, while the average outcome is a ~70% downside.”
The mechanisms of the crash
To understand the severity of the pullback, it is crucial to distinguish between market capitalization and Fully Diluted Valuation (FDV).
Retail investors typically purchase the circulating float, which is usually the 10% to 15% of tokens that are actually available for trading.
However, the price of that float is increasingly determined by the FDV, which represents the total value of the project once all venture capital and team tokens have been acquired.
Memento’s report shows that the ‘low float, high FDV’ model, where projects are launched with small circulating supply but huge overall appreciation, has hit a hard ceiling. It was noted:
“The clearest insight was how larger launches underperformed → the hyped token debuts with high FDV pulled down valuations: 28 launches started at ≥$1 billion FDV: 0% green, median absorption around ~ -81%. [Their] Opening valuations are set far too high and above fair value, resulting in poorer long-term performance with larger percentage declines.”
This meant that high-profile projects with high FDVs like Berachain saw their valuations plummet post-launch.
For context, Berachain, a layer 1 blockchain that generated significant hype, saw its implied valuation drop from over $4 billion to roughly $300 million.
While these declines represent “paper” losses for locked-in insiders, they translate into real losses for buyers of the liquid token.
Alexander Lin, co-founder of venture capital firm Reforge, spoke about this situation: pointed out:
“Marginal buyers [of these tokens] are speculative and treat the market, especially alts, like a casino. Participants who claim to be fundamentalists through their podcasts and lengthy blog posts still prioritize short-term thinking and are not quality allocators with a long-term strategy.”
The liquidity vacuum
Meanwhile, this token’s underperformance wasn’t just due to poor tokenomics. It can also be linked to an unforgiving macro environment in which the broader crypto market has struggled.
According to CryptoSlate data, the broader crypto market lost approximately $1.2 trillion in value between mid-October and the end of November.
During this period, Bitcoin returned about 30% from its high of $126,000 to below $90,000. Yet it remained the main location for institutional flows and interest in the crypto market.
This created a layered liquidity environment. The adoption of Spot ETFs in the United States has successfully channeled capital into Bitcoin and Ethereum, but has arguably cannibalized demand for riskier, long-tail assets.
So institutional allocators now have a regulated, liquid avenue for cryptocurrency exposure that doesn’t require them to work on new protocols or manage complex custody risks.
Jeff Dorman, chief investment officer at digital asset manager Arca, points to this shift as one of the main causes of TGE’s failure rate. He noted:
“I don’t know of any liquid fund that has bought a new token on TGE in over two years. That should probably tell you something.”
When liquid hedge funds and family offices refrain from participating in TGEs, the ‘bid’ side of the order book evaporates.
Without institutional support to offset the initial selling pressure from airdrop recipients and market makers, prices have nowhere to go but down.
So most of this year’s crypto TGEs ended up in a liquidity vacuum, hoping for a retail frenzy that would never materialize.
The ‘predatory’ structure
Nevertheless, the sheer consistency of losses has once again sparked a fierce debate over the ethics of the current crypto venture capital model.
Critics argue that the sector has optimized for ‘extraction’ rather than value creation, with insiders incentivized to sell into available liquidity before the project has created a sustainable revenue model.
Omid Malekan, adjunct professor at Columbia Business School, suggests that the market is finally punishing this behavior. He said:
“Raising too much money and selling too many tokens upfront destroys the value of crypto. Going forward, teams that continue to do this are doing so knowingly. They care more about making a few dollars than achieving success.”
Meanwhile, there were rare crypto projects that bucked the Red Sea trend, although they often relied on idiosyncratic catalysts.
For context, Aster, a project backed by Binance founder Changpeng Zhao, saw its valuation increase by approximately 750% after launch, from a strategic FDV of $675 million to over $5 billion.
Likewise, projects like Humanity and Pieverse retained their value.
But even among the winners, a pattern is emerging: none of the tokens trading above their listing price launched with an FDV of $1 billion or more.
Essentially, the market proved willing to support modest valuations where upside potential was visible, and outright rejected the ‘unicorn premiums’ associated with unproven protocols.
Preparations for 2026
The mess of 2025 provides a clear roadmap for issuers and investors heading into 2026.
The market has indicated that it will no longer accept tokens that serve solely as a fundraising mechanism. The era of the ‘governance token’ that does nothing but vote on forum posts is coming to an end.
Nathaniel Sokoll-Ward, co-founder of RWA platform Manifest Finance, describes the current state of token design as ‘cargo cult thinking’ because these projects mimic the aesthetics of successful networks without the underlying mechanisms.
He questioned:
“What problem does the token solve that equity or a traditional cap structure doesn’t? For most projects, the answer is nothing.”
Given all this, the mandate for token issuers is to launch differently next year. The relationship between price and reality must be reset; anchoring opening valuations to single-digit multiples of actual annualized fees is the only way to build secondary market support.
Moreover, projects must ‘float like a company’. The practice of releasing 5% of a token’s supply to simulate scarcity is dead. Issuers should target initial floats of 15-25% to deepen liquidity and reduce the volatility of early unlocks.
For investors, the shift is behavioral.
Memento Research’s Ash urged investors to treat the TGEs as earnings reports, not lottery tickets. According to him, investors in these projects should map out the unlock schedule for the next 30 to 90 days, verify that market maker terms provide real depth, and track specific catalysts such as quotes and incentives.
In the meantime, he advised investors to be patient. proverb:
“I won’t touch most launches until they pull back and let the airdrop fractal play out.”