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Just as green shoots are appearing in crypto markets, a new data set has emerged showing just how dramatically the pace of blockchain development slowed recently.

The amount of new token creation dropped during the third quarter to the lowest since at least the start of 2021, according to blockchain smart-contract auditor CertiK. The company created the data set by using the list of tokens added each quarter to the tracking website CoinMarketCap, and then stripping out so-called memecoins that serve no ostensible purpose but to provide yuks and a vessel for speculation.

Some 293 new tokens were added in the third quarter, down from 366 in the second quarter and 449 in the year-earlier period, according to the data. During the height of the bull market in cryptocurrencies in the fourth quarter of 2021, some 1,261 new tokens were created.

The numbers are consistent with separate reports illustrating the depths of so-called crypto winter. A report last month from the digital-asset firm Galaxy noted that venture-capital funding for crypto and blockchain projects slid last quarter to the lowest since late 2020.

“It may still be a sign of crypto winter where everyone has paused developing and launching, waiting for the arrival of spring,” said Ronghui Gu, CertiK’s co-founder, who is also an assistant professor of computer science at Columbia University in New York.

Decline in liquidity

Several blockchain projects have had to cut staff, with NFT marketplace OpenSea being the latest to do so, announcinga 50% reduction on Nov. 3, with the CEO writing in a post on X that the company was “building a new foundation.”

“It’s probably partially due the general decline in liquidity in the industry,” said Sean Farrell, a crypto analyst at the independent investment-research firm FundStrat. “No one wants to list a token when there there is a lack of risk-taking.”

But the price of bitcoin staged a powerful rally in October, and major altcoins have also been on the rise, fueling speculation that the worst of the market malaise might be over.

Last week, funds for investing in cryptocurrencies attracted some $767 million of fresh money, marking the best six-week stretch since the 2021 bull market.

The recent drop in token listings may reflect, to some degree, a maturation of the crypto industry, FundStrat’s Farrell said.

“There are more legitimate projects out there now, so the battle for that incremental liquidity is tougher,” he said. “The bar for launching a token is higher.”

Some would-be issuers may have been deterred by the risk of running afoul of regulators – a heedfulness that may not have existed in prior eras of the 14-year-old crypto industry.

“The regulatory uncertainty in the U.S. has discouraged many projects from launching tokens,” Farrell said.

Edited by Stephen Alpher.