Original Author: Ryan Yoon, Tiger Research

Original Translation: Saoirse, Foresight News

99% of Web3 projects have no cash income; however, many companies still invest huge amounts in marketing and events every month. This article will delve into the survival rules of these projects and the truth behind "burning money."

Key Points

• 99% of Web3 projects lack cash flow, with their cost expenditures relying on tokens and external funding rather than product sales.
• Going public too early (token issuance) leads to a surge in marketing expenses, which in turn weakens the competitiveness of the core product.
• The reasonable price-to-earnings (P/E) ratio of the top 1% of projects proves that the remaining projects lack actual value support.
• Early token generation events (TGE) allow founders to realize "exit monetization" regardless of the project's success or failure, creating a distorted market cycle.
• The "survival" of 99% of projects essentially stems from a system flaw based on investor losses rather than corporate profits.

The Premise of Survival: A Proven Revenue Capability

"The premise of survival is having a proven revenue capability" — this is the most critical warning in the current Web3 field. As the market matures, investors no longer blindly chase vague "visions." If a project cannot acquire real users and actual sales, token holders will quickly sell off and exit.

The key issue lies in the "funding turnover period," which is the time a project can maintain operations without profitability. Even without sales, fixed costs such as salaries and server fees still need to be paid monthly, and teams without income have almost no legitimate channels to sustain operational funds.

Financing Costs Without Income:

However, this model of "surviving on tokens and external funding" is merely a stopgap. There is a clear upper limit to asset and token supply; ultimately, projects that exhaust all funding sources will either cease operations or quietly exit the market.

Web3 Revenue Ranking, Source: Token Terminal and Tiger Research

This crisis is widespread. According to Token Terminal data, globally, there are only about 200 Web3 projects that generated $0.10 in revenue in the past 30 days.

This means that 99% of projects lack even the ability to cover their basic costs. In short, almost all cryptocurrency projects have failed to validate the feasibility of their business models and are gradually heading towards decline.

The Overvaluation Trap

This crisis has largely been predetermined. Most Web3 projects go public (token issuance) solely based on "vision," without even having a real product. This sharply contrasts with traditional companies — traditional firms must first prove their growth potential before an initial public offering (IPO); in the Web3 field, teams often have to prove the rationality of their high valuations only after going public (TGE).

But token holders will not wait indefinitely. As new projects emerge daily, if a project fails to meet expectations, holders will quickly sell off and exit. This puts pressure on token prices, threatening the project's survival. Therefore, most projects invest more funds in short-term speculation rather than long-term product development. Clearly, if the product itself lacks competitiveness, even the most intensive marketing will eventually fail.

At this point, the project falls into a "dilemma trap":

• If focused solely on product development: it requires a lot of time, during which market attention will gradually fade, and the funding turnover period will continue to shorten;
• If focused solely on short-term speculation: the project will become hollow and lack actual value support.

Both paths ultimately lead to failure — the project cannot prove the rationality of its initial high valuation and eventually collapses.

Seeing the Truth of 99% of Projects Through the Top 1%

However, there is still 1% of top projects that, through substantial revenue, prove the feasibility of the Web3 model.

We can assess their value through the price-to-earnings ratio (PER) of major profitable projects like Hyperliquid and Pump.fun. The P/E ratio is calculated as "market value ÷ annual revenue," and this metric reflects whether a project's valuation is reasonable relative to its actual income.

P/E Ratio Comparison: Top Web3 Projects (2025):

Note: Hyperliquid's sales are based on annualized estimates since June 2025.

Data shows that the P/E ratios of profitable projects range from 1x to 17x. Compared to the average P/E ratio of about 31x for the S&P 500 index, these top Web3 projects are either "undervalued relative to sales" or have "excellent cash flow."

The fact that top projects with actual earnings can maintain reasonable P/E ratios makes the valuations of the remaining 99% of projects seem untenable — it directly proves that the high valuations of most projects in the market lack a basis in actual value.

Can This Distorted Cycle Be Broken?

Why can projects with no sales still maintain valuations in the billions? For many founders, product quality is a secondary factor — the distorted structure of Web3 makes "quick exit monetization" much easier than "building a real business."

The cases of Ryan and Jay illustrate this point perfectly: both launched AAA game projects, but their outcomes were drastically different.

Founder Differences: Comparing Web3 and Traditional Models

Ryan: Chose TGE, Abandoned In-Depth Development

He opted for a path centered on "profitability": before the game launched, he raised early funds by selling NFTs; then, while the product was still in rough development, he held a token generation event (TGE) based solely on an aggressive roadmap and went public on a medium exchange.

After going public, he maintained the token price through speculation, buying himself time. Although the game was ultimately delayed and of very poor quality, holders quickly sold off. Ryan eventually resigned, claiming to "take responsibility," but he was the true winner of this game —

On the surface, he pretended to focus on work while actually earning a high salary and profiting significantly from selling unlocked tokens. Regardless of the project's ultimate success or failure, he quickly accumulated wealth and exited the market.

In Contrast, Jay: Followed the Traditional Path, Focused on the Product Itself

He prioritized product quality over short-term speculation. However, developing a AAA game takes years, during which his funds gradually ran out, leading to a "funding turnover crisis."

In the traditional model, founders must wait until the product is launched and sales are realized to gain substantial returns. Although Jay raised funds through multiple rounds of financing, he ultimately had to shut down the company due to a lack of funds before the game was completed. Unlike Ryan, Jay not only did not make any profit but also incurred significant debt, leaving a record of failure.

Who Is the Real Winner?

Neither case produced a successful product, but the winner is clear: Ryan accumulated wealth by exploiting the distorted valuation system of Web3, while Jay lost everything in his attempt to create a quality product.

This is the harsh reality of the current Web3 market: exiting early by leveraging inflated valuations is far easier than establishing a sustainable business model; ultimately, the cost of this "failure" is borne entirely by investors.

Returning to the initial question: "How do 99% of unprofitable Web3 projects survive?"

This harsh reality is the most candid answer to that question.

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