In January 2024, the cryptocurrency landscape experienced a noteworthy shift with the creation of an astonishing 600,000 new tokens, representing a staggering 12-fold increase compared to the monthly average of 50,000 tokens recorded throughout 2022 and 2023. This significant uptick in token generation commenced in the final quarter of 2023, where the monthly token issuance had already surged to 400,000. Such an accelerated trend raises critical questions about market dynamics and liquidity management.
Moreover, the expansion of blockchain networks and decentralized exchanges (DEXs) has paralleled this growth, with an estimated launch of 5 to 10 new chains each month. Particularly, May 2024 witnessed an unprecedented spike, documenting the introduction of 17 new chains in one month. However, experts caution that this proliferation of tokens and blockchains might lead to liquidity dilution, as noted by Bobby Ong, co-founder of CoinGecko, who stated that excessive token variety could potentially undermine trader interest and liquidity levels.