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- Charles Hoskinson has defended Cardano and half a dozen other blockchain networks, including Tezos, Stellar, and XRPL, after a scathing article by Forbes on ‘crypto zombies.’
- Forbes tore into over 20 crypto networks with a market cap worth over a billion dollars but few developers, users and applications and lack substantial use in the real world.
A Forbes article that tore into two dozen blockchain projects and described them as crypto zombies has caused uproar in the sector, with several industry leaders blasting the outlet and defending their projects against the allegations.
Forbes investigated the top 50 blockchain networks and ranked them according to the number of monthly active developers, fees generated over the past year, Â total value locked, and the market cap-to-fees ratio. It concluded that over 20 crypto projects with a market cap of over $1 billion are held up purely by speculation and don’t offer much.
The attack roped in some popular projects, led by XRP and Cardano, collectively worth $59.3 billion. Others on the list included Stellar, Stacks, Bitcoin Cash, Litecoin, Fantom, Algorand, Tezos and EOS.
Leaders of the respective communities were quick to defend their projects and dismiss the article. Charles Hoskinson, the founder of Cardano, took to Twitter to brush aside the attack on his project, alluding the zombie comparison was because the projects included “got all the brain.”
Hey guys @tezos @Algorand @bitcoincashorg @Ripple_XRP1 @StellarOrg @BobSummerwill we are all Crypto Zombies according to Forbes.
I guess it's because we got all the 🧠! pic.twitter.com/nwKbf7R4Pb
— Charles Hoskinson (@IOHK_Charles) March 27, 2024
Hoskinson was joined by XRP faithful, who dismissed the author and the article. Panos Mekras, the founder of XRPL-based Anodos Finance, described the article as an “excellent piece of nonsense and misinformation.” He added:
[The author] is clearly misinformed and didn’t bother to do the basic research for the piece he wrote. Unfortunately, these are the idiots who write on mainstream media and “lecture” the public and the masses.
Pro-XRP crypto lawyer Bill Morgan questioned why the SEC would be so intent on bringing down Ripple if XRPL was a zombie chain that nobody was using.
The Zombie chain the SEC alleges more than 80 institutions signed with Ripple to utilise since the Ripple lawsuit commenced despite the chilling effect of the lawsuit on Ripple’s business in the US. Poor @laurashin is so poorly informed. https://t.co/ur8xTHYjOQ
— bill morgan (@Belisarius2020) March 28, 2024
Emir Yavuz, who handles community engagement at Ultra Stellar, a DeFi ecosystem on the Stellar network, jumped in to defend Stellar. He stated:
Honestly, it’s disappointing to see a “research” piece like this from Forbes about Stellar without conducting proper research, engaging with the community, or consulting the non-profit Foundation behind Stellar.
He further pointed out some of Stellar’s major leaps in recent times. They include tokenization, including WisdomTree’s $365 million tokenized assets on the network, as Crypto News Flash has previously reported.
Some within crypto agreed with most of the article’s contents, led by renowned independent journalist Laura Shin, who described it as an “excellent story.”
‘Crypto Zombies’
In its article, Forbes blasted Ripple for its continued claims of transforming global money transfers, yet it has failed to embark on any large-scale initiative. It claimed that Ripple had failed to rival SWIFT and was losing the little market share it once had to stablecoins, which are more efficient. The treasury holdings worth over $20 billion in XRP tokens also came under fire.
Interestingly, some of the attacked crypto projects concurred with the findings. Bob Summervill, the executive director of the Ethereum Classic Cooperative, told the news outlet:
ETC is listed nearly everywhere because of its history, which turns into quite a lot of trading volume. Much of the activity is speculative.
One of the metrics that Forbes based its attacks on the most was the ratio of the market cap to the fees. On Wall Street, this metric uses market cap and sales. XRP, for instance, only earned $583,000 in fees last year despite its $36 billion market cap. This puts its price-to-fee ratio at a staggering 61,689. To appreciate this number’s size, consider that Nvidia, which has recorded unprecedented growth in market cap to hit $2.25 trillion, has a ratio of 37.
Another metric that was severely attacked was the fundraising and hoarding of funds. Most of the ‘crypto zombies’ raised hundreds of millions for future expansion (which flirts with the SEC’s Howey test for securities). Ripple, for instance, holds $24 billion in XRP, which it releases and sells periodically to fund operations.
Matt Hougan, the CIO of Bitwise Asset Management, summed it up the best, stating:
It’s like early-stage venture capital funds or companies that raise too much money and don’t know how to adequately deploy it. There’s no way to return the treasury to the investors.
