Forbes' Scathing 'Crypto Zombies' Article Sparks Uproar, Prompts Defense from Industry Leaders

Forbes' criticism of over 20 underutilized blockchain networks, including Cardano and Stellar, sparked industry debate. Charles Hoskinson, Cardano's founder, rejected the "crypto zombie" label, attributing the projects' success to their intelligence.

Forbes' Scathing 'Crypto Zombies' Article Ignites Uproar, Sparks Defense from Industry Leaders

A recent Forbes article has sparked a storm of controversy within the cryptocurrency sector, painting a grim picture of over two dozen blockchain networks as "crypto zombies" lacking significant usage, development, and real-world applications. The article's scathing analysis has drawn sharp criticism from several industry leaders, who have rallied to defend their respective projects against the allegations.

Forbes' Methodology and Targeted Projects

Forbes' analysis scrutinized the top 50 blockchain networks, evaluating them based on four key metrics: monthly active developers, fees generated over the past year, total value locked, and the market cap-to-fees ratio. The article concluded that over 20 crypto projects with market caps exceeding $1 billion are sustained solely by speculation, offering minimal value or utility.

Among the projects targeted by Forbes were some of the most prominent names in the industry, including XRP, Cardano, Stellar, Stacks, Bitcoin Cash, Litecoin, Fantom, Algorand, Tezos, and EOS. Collectively, these projects command a market capitalization of approximately $59.3 billion.

Industry Leaders Counter Attack

The allegations leveled by Forbes have been met with swift and vehement rebuttals from leaders within the respective communities of the targeted projects. Charles Hoskinson, the founder of Cardano, took to Twitter to dismiss the "zombie" comparison, playfully suggesting that the projects included in the article possess superior intelligence.

Hoskinson's sentiment was echoed by proponents of XRP, who derided the article's author and the outlet. Panos Mekras, founder of XRPL-based Anodos Finance, denounced the piece as "nonsense and misinformation," questioning the author's research and understanding of the industry.

Pro-XRP crypto lawyer Bill Morgan raised concerns over the SEC's pursuit of Ripple if XRPL were indeed a dormant "zombie chain." Emir Yavuz, who handles community engagement at Ultra Stellar, defended Stellar, emphasizing the project's recent strides in tokenization, including WisdomTree's $365 million in tokenized assets.

Partial Concurrence from Crypto Insiders

While some within the cryptocurrency community have vehemently rejected Forbes' findings, others have acknowledged the validity of certain observations. Renowned independent journalist Laura Shin praised the article for shedding light on the issue of "crypto zombies," describing it as an "excellent story."

Forbes' Critical Metrics

Forbes' analysis heavily relied on the following metrics to assess the viability of the targeted blockchain networks:

• Ratio of Market Cap to Fees: This metric compares the market capitalization of a project to the fees it generates. Projects with high ratios may indicate speculative hype rather than meaningful usage.
• Fundraising and Hodling of Funds: Forbes highlighted the tendency of "crypto zombies" to raise substantial funds for future expansion, potentially resembling securities offerings that fall under the SEC's Howey test. The article further criticized the hoarding of funds by projects such as Ripple, which holds a significant treasury of XRP tokens.

Conclusion

Forbes' "crypto zombies" article has undoubtedly sparked a heated debate within the cryptocurrency industry. While some have vehemently refuted the allegations, others have acknowledged the need for increased focus on project viability and real-world applications. The article has also raised questions about the fundraising practices of certain blockchain networks and the potential implications under securities regulations.

As the cryptocurrency sector continues to evolve, the issue of "crypto zombies" is likely to remain a topic of discussion. The industry must grapple with the challenge of distinguishing between projects that offer genuine value and those that rely solely on speculation. This scrutiny will ultimately benefit the sector by fostering innovation and weeding out unsustainable projects, paving the way for a more robust and thriving ecosystem.