Why Most Blockchains Fail: Four Paths to Survival

Real Vision founder Raoul Pal argues that most blockchains will fail unless they build lasting demand and network effects, drawing a comparison with start-ups after the dot-com crash. He says more than 13 million tokens had stopped trading by the end of last year, underscoring the high failure rate across crypto projects. Pal identifies four possible paths for a blockchain to survive: become a broad on-chain economy, as he says Ethereum, Solana and Sui have; specialise in a market such as trading, as Hyperliquid does; operate as a Layer 2 that rents security from a Layer 1; or rely on a centralised company’s backing, as Pal says BNB Chain does with Binance. Many newer blockchains, he warns, fit none of these models and lack a durable competitive edge. Low circulating supply and upcoming token unlocks can add selling pressure when demand is weak. For traders evaluating blockchain adoption, Pal cautions that fees, total value locked (TVL) and trading volume can be misleading, as they may rise with prices and speculation. He instead highlights economic activity per active user, capital retention, stablecoin balances during downturns and developer inflows. In an analysis of 12 networks, higher capital turnover around the January 2025 market peak was associated with weaker subsequent performance; capital that stayed on-chain appeared more durable. He says Ethereum, Solana and Sui maintained user-level economic density and grew stablecoin balances during the period examined. Pal disclosed that he works for the Sui Foundation. The analysis is a framework for assessing blockchain resilience, not a short-term market catalyst or a guarantee of which networks will survive. Traders may use it to distinguish durable adoption from speculative activity, while recognising that token prices remain exposed to broader market conditions.