The "Eighteen-Month Curse" of the encryption industry: Why is it difficult for encryption startups to create long-term products?

In the crypto world, popularity seems to be more valuable than innovation. From NFTs to Decentralized Finance, and AI agents to prediction markets, countless founders continually pivot to (, chasing the latest narratives. This seemingly flexible strategy actually reveals the structural flaws of the industry. When investments and attention are tied to new stories, and no one is willing to spend years to complete a product, Crypto Assets may be doomed to exist in a perpetual state of “coming soon.”

From NFT, DeFi to AI: The Infinite Shift of Crypto Entrepreneurship

Rosie Sargsian from Ten Protocol pointed out in a lengthy article titled “Why the Crypto Industry Cannot Establish Long-Term Sustainable Things” that teams that developed NFT platforms in 2021 transitioned to DeFi in 2022, then jumped into AI agents in 2023, and may start talking about prediction markets this year. This is not an isolated case, but rather a norm in the crypto startup scene.

He believes that the founders' choice is not a mistake; their approach is actually correct: “because this game continually rewards shifting narratives rather than sticking to the project to the end.”

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Eighteen-month product cycle: hot money chasing rewards for short-term projects

Rosie is concerned that the lifecycle of crypto projects now only lasts about 18 months: “narrative birth, capital influx, team follow-up, product development, topic fading, and then turning again.”

The investment amount in encryption VC has dropped by 60% in just one quarter, squeezing the time and funds for project founders to launch products before the next wave of trends.

He admitted that this kind of rhythm makes it impossible for any real infrastructure to take shape. To truly find a product-market fit for a product, it requires three to five years of repeated refinement. However, in the encryption industry, if you are still working on “the previous narrative” after 18 months, you will be eliminated by the market.

Abusing sunk costs: Projects that are always “about to be completed”

Traditional entrepreneurship theory tells us: don't fall into the sunk cost )sunk cost( fallacy, if things aren't looking good, pivot. But in the field of Crypto Assets, this has instead become a vicious cycle.

Rosie pointed out that once a project faces difficulties in fundraising, slows down in user growth, or the topic cools down, it will immediately pivot, as this is the only way to secure the next round of funding. He admitted that every founder has thought this way at some point:

Option A: Continue developing the ongoing project; focusing for two to three years may lead to success.

Option B: Pursue hotspots, strive for financing, prioritize earning returns.

He stated that the vast majority of people choose B, because the market rewards not the “completion”, but those “attentions” that start:

This market punishes finished products because everyone can realize their limitations, while “nearly finished” products hold infinite potential.

The paradox of everyone chasing narratives: truly groundbreaking innovations emerge when no one is paying attention.

In addition, crypto venture capital )VC( is undoubtedly one of the accomplices, as they do not invest in products, but rather in attention. Meanwhile, developers are being lured away with high salaries to create new narratives, marketers follow the flow of funds, and users come and go like the wind due to airdrops and hype.

Investors and the market are more willing to fund things that have “attention”, so everyone is assisting in maximizing the narrative, which means optimizing the story rather than the product.

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Rosie pointed out that Bitcoin and Ethereum were born in an era when no one was paying attention, with no VCs and no tokens. In contrast, projects in the current boom always die with the tide receding.

Rosie: The situation will not change; we can only rely on the team's self-discipline.

The reason the crypto industry cannot establish long-term products is not due to a lack of technology, but rather the misalignment of incentive mechanisms and cultural rejection of long-term construction. Rosie bluntly stated that this situation will not change:

Token-based incentive mechanisms create opportunities for liquidity exits. As long as founders and investors can exit before the product matures, they will do so.

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This article “The 18-Month Curse of the Crypto Industry”: Why is it Difficult for Crypto Startups to Build Long-Term Products? Originally appeared in Chain News ABMedia.