CZ: More dApps Needed After New Chains Experience Crashes

Changpeng “CZ” Zhao, the former CEO of Binance, recently weighed in on the state of the blockchain and crypto industry, urging industry participants to focus more on developing decentralized applications (dApps) instead of creating new blockchain networks. His statement was in response to a post by Messari researcher @defi_monk, which highlighted a troubling trend: many new blockchains are struggling after their Token Generation Events (TGEs), with their token values plummeting.

Messari’s data shows a significant decline in the cumulative token returns of several prominent blockchain projects. Starknet, for example, has seen an 87% decrease, while Dymension, Blast, and Mode have experienced similar steep drops of around 85%, 85%, and 70%, respectively. Even major projects like Berachain and Scroll have not been immune, with their tokens losing 59% and 50% of their value, respectively, since their TGEs.

The only exception to this downward trend has been Hyperliquid, which has surged by an impressive 1,100% since its TGE, marking it as a rare success in the current market. However, this one outlier doesn’t seem to overshadow the broader pattern of declining token values for new projects.

The researcher at Messari also noted that the market has been oversaturated with new Layer 1 and Layer 2 blockchains, and the recent liquidations of long positions amounting to around $10 billion suggest that investors are becoming increasingly cautious. By the end of April, another $17 billion worth of token unlocks are expected to flood the market, further complicating the outlook for new blockchain projects.

In this context, CZ’s comment—”Need more dapps instead of chains”—addresses a critical issue in the industry: the market is flooded with blockchain projects, but many of these blockchains are struggling to prove their long-term value. New chains often fail to gain significant traction or adoption, and when they do, they often face issues like token dumps from insiders, lack of utility, and low user engagement.

The broader sentiment expressed by CZ and echoed by many crypto users is that the industry would benefit more from a focus on building dApps—decentralized applications—that can actually create tangible use cases for blockchain technology. DApps provide direct value to users, whether it’s through decentralized finance (DeFi) platforms, games, or other services that leverage blockchain’s capabilities. If developers concentrate on these kinds of applications, it could lead to more meaningful and sustainable growth for the industry, rather than the proliferation of chains that do not provide sufficient value.

Furthermore, some in the community argue that the crypto space needs to embrace decentralization more effectively. While new chains are still popping up, the market might be better served by improving the underlying infrastructure that already exists. Creating more decentralized applications on established chains—rather than launching entirely new ones—could help address scalability issues, improve user experience, and increase overall adoption.

This perspective resonates with broader discussions in the crypto community about the need for greater innovation in the sector. Blockchain technology’s true potential lies not only in its ability to support new networks but in its capacity to drive real-world applications that change industries. Whether it’s through dApps that enhance financial systems, gaming, or other sectors, the focus should shift toward creating applications that provide value rather than adding more chains that saturate the ecosystem without sufficient utility.

The recent struggles of projects like Berachain also serve as cautionary tales. Despite having one of the largest airdrops of the year and releasing its mainnet with high anticipation, the token’s value collapsed as insiders began selling off their holdings, demonstrating the risks involved in launching new blockchain projects. These issues often lead to skepticism from both users and investors, further undermining the success of such ventures.

In the face of these challenges, CZ’s call for more dApps instead of more chains offers a pragmatic solution: focus on building applications that deliver value, engage users, and contribute to the growth of the decentralized ecosystem. This could ultimately drive more adoption, sustain long-term growth, and enable the crypto industry to realize its full potential.

As the industry continues to evolve, it will be interesting to see if more developers heed CZ’s advice and shift their efforts toward building dApps. The success of these applications could become the key to overcoming the current stagnation and propelling the blockchain space forward.