Crypto's hellish 2022 was awash in washouts: Terra-Luna crashed, FTX rugged and crypto lenders bombed. Yet the disasters failed to sink many of the teams perhaps most vulnerable to mayhem: early-stage startups.

Over 80% of the crypto startups that announced seed rounds in 2022 continue to build today, according to a new report from Lattice VC.

The finding may add some retrospective hope to what was otherwise crypto’s darkest year yet. Venture capital companies deployed over $5 billion into 1,200 teams that unveiled their seed rounds during the tumultuous months of 2022 – 2.5 times more capital than in 2021.

“Because of the massive influx of capital for 2022, there was just a natural expectation” of a higher fail rate, said Mike Zajko, co-founder at Lattic. The prediction hasn’t really come to fruition.

Eigen Labs led the pack for crypto’s 2022 class. Its restaking invention set a narrative that two years later anchors many incoming startups in Ethereum and beyond.

Such success is hardly representative of the whole. A mere 1% of teams found product-market fit, and only 12% of the teams have raised follow-on rounds, Lattice said.

That sobering reality indicates rocky times ahead for teams that continue to hope for a home run. It will be harder for them to come by without the exuberance and retail inflow of a true bull market. At some point, their runways may run out.

“Teams have been able to stretch it to try to get to the other side,” Zajko said.

2022-era startups have seen notably fewer token launches than teams of 2021, according to Lattice: 15% in 2022 compared to 2021. This may be explained by teams missing the “bull market window,” said Zajko, as well as centralized exchanges becoming “choosier” about which assets to list.

Platform appears to be as important as product, if not more so. Teams that launched on NEAR, Flow and StarkNet – three ecosystems that raised nine-figure sums in 2021 and 2022 – have completely failed to raise follow-ons, the report said.

Crypto’s gaming sub-sector provides a useful explainer case. In 2022, that pack raised $700 million from venture companies betting on crypto-powered video games as the lucrative future.

That hasn’t happened yet. The big ideas of crypto gaming – NFTs and the metaverse – are mostly afterthoughts in 2024 despite dominating media and investor attention in 2022.

“Whatever the hot trend is during that year is not likely to be what people are talking about or excited about 1-2 years later,” said Zajko.

Meanwhile, the two big trends of this year – AI and decentralized physical infrastructure (DePIN) – saw little cap table action in 2022. In two years the market will get a better sense of whether the 2024 narratives have more staying power than those of 2022.