Token Issuance Failures Reach Record Levels Amid High FDV Concerns

Token issuance failure rates have reached unprecedented levels, according to insights shared at the EthCC conference. Darius Moukhtarzade, a researcher at 21Shares, identified the widely used “low circulating supply, high fully diluted valuation (FDV)” model from 2024 to 2025 as a primary cause of declining token performance.

He explained that projects often launched with limited circulating supply, which artificially pushed prices higher. As locked tokens were later released in concentrated phases, internal selling pressure increased sharply. Retail investors struggled to absorb this supply, creating a downward “death spiral” that weakened market confidence and led to failed token launches.

Framework Proposed for Sustainable Token Economies

Moukhtarzade proposed a framework for 2026 focused on sustainability. Key recommendations include raising the initial circulating supply above 20% to improve price discovery and reduce future unlocking pressure. He also emphasized the importance of clear product-market fit (PMF), measurable user growth or revenue models, stronger value capture mechanisms, and greater transparency.

He added that long-term token success will depend on resilient on-chain economies supported by institutional funding and stricter regulatory standards rather than short-term speculative growth.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.