Why most cryptos still have no real demand (and what comes next)

The crypto market is full of big valuations and bold narratives, but underneath the surface there’s an uncomfortable truth: most blockchains still aren’t generating meaningful real-world demand for their tokens. Prices are mostly driven by speculation, not usage. That gap between valuation and actual economic activity is starting to matter more as markets turn risk-off.

Macro backdrop: war, oil, and why risk assets are on edge

Before getting into crypto itself, it’s worth understanding the wider backdrop. Geopolitical tensions in the Middle East remain unresolved, even if headlines sometimes suggest otherwise. Shipping through the Strait of Hormuz has restarted, but traffic is still well below pre-war levels. That means energy markets are not truly back to normal.

At the same time, there’s a growing disconnect between oil prices and bond yields. Oil has dropped sharply, but the US 2‑year yield – which reflects expectations for interest rates and inflation – has stayed elevated. In other words, the bond market doesn’t fully believe that inflationary pressures or geopolitical risks are gone.

For crypto, this matters. If inflation remains sticky and central banks keep policy tight, risk assets like altcoins face a tougher environment. When liquidity is scarce, purely speculative assets get hit the hardest.

Sonic (ex-Fantom): a warning sign for struggling altcoins

One of the clearest examples of the current pain in altcoins is Sonic, the rebranded version of Fantom. Recently, several top figures – including Michael Kong, Andre Cronje, and David Richardson – resigned from Sonic’s board. The token has plunged roughly 90% over the last year, extending what’s become one of the most dramatic post-cycle collapses in this market.

With a market cap around $116 million after a 90% drawdown, Sonic is far from alone. Many projects are seeing their treasuries shrink, user activity stagnate, and core contributors walk away. This is what a bear market culling looks like: weaker projects lose talent, liquidity, and community attention all at once.

Investors should see Sonic’s situation as a reminder that not every chain survives the downcycle. When there’s no strong underlying demand for the token beyond speculation, there’s nothing to catch the fall once hype fades.

The core problem: almost no underlying token demand

The bigger issue isn’t just one project. It’s structural. For most blockchains, there is still almost no real, recurring demand for their native tokens. The vast majority of activity is speculative trading, not people paying to use applications that solve real problems.

One way to see this is by looking at protocol fee revenue – the actual fees users pay on-chain, usually in the native token. Those fees are the closest thing crypto has to “revenue” for a protocol. They represent real economic demand for block space and services.

When you compare daily fee revenue to market caps, the mismatch is huge. Many chains are valued in the billions while generating only thousands of dollars per day in fees. That’s not a sustainable long-term relationship unless you believe usage will grow massively from here.

Who is actually generating fees today?

Some chains do stand out with relatively higher fee revenue, which hints at real usage:

• Tron (TRX) – Tron consistently generates close to $1 million in daily fees. A large part of this comes from stablecoin activity, especially Tether (USDT). Because USDT is heavily used on Tron, there’s genuine transactional demand for block space and, by extension, the TRX token.
• Solana (SOL) – Solana is generating around $350,000 in daily fees. Annualized, that’s roughly $127 million if activity stays constant. With a market cap in the tens of billions, the implied price-to-earnings-style multiple is extremely high, but at least there is real on-chain activity.
• Ethereum (ETH) – Ethereum’s daily fees are currently around $214,000, or about $78 million per year. With a market cap near $200 billion, the valuation is rich relative to current revenue, but Ethereum remains the primary settlement layer for DeFi and many other protocols.
• Canton – Canton, a permissioned network focused on institutional use, reportedly generates around $2 million in fees, showing that enterprise-focused infrastructure can already support meaningful economic activity.

Even for these leaders, valuations are pricing in a lot of future growth. But they at least have a base of real demand to build from.

The long tail: tiny fees, huge valuations

Once you move past the top few chains, the numbers get much more worrying. Many well-known networks are generating only a few thousand dollars – or even just hundreds of dollars – in daily fees:

• Sui (SUI) – around $2,000 per day
• Toncoin (TON) – around $2,000 per day
• NEAR Protocol (NEAR) – around $2,000 per day
• Cardano (ADA) – roughly $1,000 per day
• XRP Ledger (XRP) – around $424 per day
• Stellar (XLM) – around $351 per day
• Algorand (ALGO) – about $13 per day

These are tiny numbers. A single small restaurant or local shop can generate more daily revenue than many of these chains. Yet some of them still command multi-billion-dollar market caps.

Hedera (HBAR), for example, is often highlighted as a promising infrastructure project with strong enterprise partners. But even there, current fee revenue is minimal relative to its valuation. The investment thesis is almost entirely about future adoption, not today’s cash flows.

Speculation vs. utility: what really drives prices right now

All of this leads to a simple conclusion: most crypto tokens are still priced based on what investors hope will happen, not what is actually happening on-chain. Demand is overwhelmingly speculative.

That’s not inherently wrong – early-stage technologies are often valued on future potential. But it does mean prices can fall a lot if macro conditions tighten, liquidity dries up, or narratives shift. When there’s no strong base of real users paying real fees, there’s nothing to support valuations during a downturn.

Bitcoin is a partial exception. It doesn’t rely on transaction fees in the same way because its main narrative is as a store of value rather than a high-utility smart contract platform. But even Bitcoin is showing odd behavior at times, as many traders have noticed. If you’re interested in that side of the market, it’s worth reading analyses like this deep dive into what’s going on with Bitcoin right now.

From pilot to production: the next phase for crypto

So where does this leave investors? The key idea is that we’re still in the “pilot” phase for most of crypto. There are proofs of concept, test deployments, and early users, but not yet mass production-level adoption.

The big opportunity – and the big risk – lies in the transition from pilot to production. If major institutions, financial market infrastructures, and real-world businesses start using blockchains at scale, fee revenue and on-chain activity could grow dramatically. That would finally create strong, recurring demand for certain tokens.

Projects like DTCC’s on-chain pilots and enterprise-focused networks suggest this shift is coming, but the timing is uncertain. Until then, valuations are mostly a bet on future execution.

How to think about valuations: tokens as “equity” in protocols

Some professional investors now analyze crypto assets in a way that’s similar to equities. Instead of looking at a company and its shares, they look at a protocol and its token. The questions are similar:

• Does this protocol generate revenue (fees)?
• Does the token capture that value in a meaningful way?
• What is the implied multiple (like a P/E ratio) if you compare fees to market cap?
• Is there a realistic path for revenue to grow enough to justify today’s price?

When you apply that lens, you see that many tokens are “relatively overvalued” based on current fundamentals. But that doesn’t automatically make them bad investments – it just means you’re betting heavily on future growth.

For long-term investors, this can still be attractive, especially if you believe we’re early in the adoption curve. But it also argues for patience and discipline, particularly if you think the market has another leg down to go.

Why another leg lower in crypto wouldn’t be surprising

Given the macro backdrop and the weak fundamental demand for most tokens, it wouldn’t be surprising to see another meaningful drop in crypto prices. Several indicators point in that direction:

• USDT dominance is close to breaking into new all-time highs, suggesting more capital is sitting in stablecoins rather than riskier altcoins.
• Many crypto ETPs and altcoin portfolios look structurally weak on the charts.
• Macro conditions remain tight, with central banks wary of cutting rates too quickly.

For builders and long-term investors, a deeper correction could actually be an opportunity. Lower prices make it cheaper to accumulate the large token positions needed to run validator or infrastructure nodes. That can turn a downturn into a chance to position for the next cycle’s winners.

If you’re thinking about how to approach that kind of environment, it may help to study how some investors are already positioning through volatility, as discussed in guides like this breakdown of buying the crypto crash and DCA strategies.

What to focus on as the market “culls” weak projects

As the bear market grinds on, a natural culling is underway. Projects with no real usage, weak communities, and limited funding are struggling to survive. That’s painful in the short term, but healthy for the ecosystem long term.

For investors, the focus should shift from hype to fundamentals:

• Real usage: Are people actually using the chain or app for something valuable?
• Fee revenue: Is the protocol generating meaningful, recurring fees?
• Token design: Does the token capture value from usage, or is it just a speculative chip?
• Path to production: Are there credible plans or pilots that could scale into real-world adoption?

Infrastructure-level projects like Ethereum, Solana, Tron, Hedera, and others may still have huge upside if they become the backbone of future financial and data systems. But until that usage shows up in the numbers, investors should recognize that they’re paying mostly for potential.

Bottom line

Most cryptos today live in a strange in-between state: high valuations, low real usage, and a macro environment that’s increasingly unforgiving of pure speculation. The next major phase for this industry will be defined by which chains can move from pilot experiments to production-grade infrastructure with real users and real revenue.

Until then, expect more volatility, more project failures, and more pressure on tokens that can’t justify their prices. For patient, fundamentals-focused investors, that’s not a reason to abandon the space – it’s a reason to be selective, cautious, and ready to act when the next wave of real demand finally arrives.