At first glance, this looks brutal. Projects backed by top-tier VCs like Paradigm, Sequoia, and Polychain losing 88–99% of their value sounds like total failure. But the reality is more complicated than “VCs got wrecked.”
The key thing most people miss is how private valuations work. These billion-dollar numbers were set during peak hype cycles, often based on future potential rather than current usage. When liquidity was everywhere, capital chased narratives like ZK, L2 scaling, and NFTs aggressively. That pushed valuations far beyond what real adoption could justify at the time.
Now that liquidity has tightened, those expectations are being repriced.
The fact that 4 out of 10 projects are ZK or Layer 2 is not random. These sectors attracted massive funding because they are seen as long-term infrastructure plays. But infrastructure takes years to mature. In the short term, that means high burn, slow revenue, and weak token performance once speculation fades.
Another important point is that “down 95%” does not always mean the company is dead. It often means the token price in the public market is far below the last private round valuation. Those are two very different things. Teams may still have runway, tech progress, and active ecosystems, even if the token looks destroyed.
That said, there is a real lesson here.
VC backing is not a guarantee of success, and high valuations do not protect you from market cycles. In fact, projects that raise at extreme valuations often have more downside later because expectations are harder to meet.
Zooming out, this is part of a normal cycle reset. In every cycle, capital overflows into narratives, valuations stretch, and then reality pulls everything back down. What survives is not what raised the most money, but what actually builds something people use.
So this list is not just a graveyard. It is also a filter.
And in crypto, what survives the filter is usually what defines the next cycle.
This article is for informational purposes only. The information provided is not investment advice.