ERC-20 token creation dropped by 39% in one month while it ramped up during the bull runs in 2021 as we saw in our altcoin news.
The altcoins were propelled forward by the success of SHIB and DOGE which caused an influx of new coins on the market. These ERC-20 tokens mostly turned out to be scams or pump-and-dumps schemes but now it seems that the tides are turning as the ERC-20 token creation crashed by 39% in one month.
A new report showed that the creation of ERC-20 tokens tanked in 2022 and this is no surprise given that the market was in a bear run for most of the year. This makes it less profitable the creation of new tokens. The decline was pronounced in May when Analytix reports showed that these tokens’ creation dropped by almost 40% in one month. The numbers showed the fast rate at whcih these new tokens were put into the market. In April, there were 112,996 total tokens created on the various networks in the space and while in May, the number dropped to 68,380 tokens, showing a decline across all networks.
It’s in line with the decline that was seen in many spheres in the space. An example is a drop in Defi TVL while the total TVL also dropped by 40% and the price of ETH crashed below $2000. the DEFI explorer noted an increase in the transaction volume because of investors trying to sell their coins as the price of ETH dropped as well. The creation of IRC-20 token is spread on a number of networks and thousands of tokens were created on these networks on a monthly basis. As usual, there were some networks where this activity was more pronounced than others. The BSC network was a hotbed for the creation of ERC-20 tokens and the network saw the most creation taking place.
In April, 55,260 tokens were created on the Binance Smart chain which made up to 50% of the entire token creation. The BSC testnet follows the trend with 41,185 tokens created and combined, it sees the most activity on the network with 80% of the new coin activity. BSC is favored beucase of the cheap fees and the fact that it is easy to create a token so it also boasts a huge number of investors and a user base that is willing to invest in untested assets and makes it a favorite among developers that want to create new coins.
What the numbers show is that the bear market is starting to affect the profitability of the new coins and with the prices low, the investors are less likely to risk investing in untested projects and most of the tokens are doomed to fail.
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