Over 100 crypto projects have shut down, filed for bankruptcy or gone permanently dark in 2026, according to data from RootData, with the pace of closures accelerating throughout the year.
Four major firms announced closures or filings within a single week in late July alone: BitMEX, BitMart, Movement Labs and Storj Labs. The exits span every layer of the industry, including exchanges, wallets, DeFi lending protocols, NFT marketplaces and layer-1 blockchains. Even an entire Polkadot parachain — Moonbeam — shut down permanently on July 31, stranding users who hadn't bridged their assets off the chain in time.
The shakeout is hitting overcrowded sectors such as layer-2 networks and protocol tooling hardest, as altcoin prices have dropped 70% to 90%, draining token-denominated startup treasuries. Over $1.1 billion has been lost to exploits in the first half of 2026 alone, and with venture capital rescue funds drying up, single hacks are now forcing immediate protocol bankruptcies, leaving abandoned, unmaintained "zombie contracts" running on-chain.
A Crowded Layer-2 Market Consolidates
Ethereum's layer-2 ecosystem has been shrinking after explosive early growth. These networks, which surged in 2023, process transactions off Ethereum, bundle them together, and post them back to the main blockchain, offering faster and cheaper transactions while still relying on Ethereum for security. As launching a chain became easier, the number of general-purpose layer-2s ballooned, creating a crowded market with little differentiation.
"There were way too many general-purpose layer twos, which frankly don't make sense as a product, because there's no reason to have many, many versions of the same thing," Ben Fisch, CEO of Espresso Systems, told CoinDesk. "We're in a consolidation phase for general-purpose layer twos, not layer twos broadly."
