After four years, Entropy ceases operation: is this a signal for the entire industry?

The decentralized startup Entropy announced the end of its activities after four years of presence in the market. According to NS3.AI, the project aimed to solve one of the most complex cryptography problems – computations involving multiple partners and asset management across different blockchains. Despite raising approximately $27 million from reputable investors, including a16z fund, it was unable to achieve financial sustainability.

Why the project couldn’t withstand market competition

The real reason for the shutdown is the mismatch between venture capital ambitions and the actual capabilities of Entropy’s business model. The startup faced a classic problem common to many crypto projects: technological innovation alone is insufficient for scaling. The team realized that existing monetization channels could not support the growth rates expected from the company at the venture funding level.

Crypto startups in 2025-2026: a new wave of challenges

The case of Entropy is just one of many examples of the difficulties faced by young projects in the crypto industry. Increased competition, changing funding conditions, and rising demands for commercial viability have forced many startups to reevaluate their strategies. Over its four years of existence, Entropy repeatedly adapted its scope of work, but this was not enough to survive in a rapidly changing market.

The project’s closure demonstrates that even a strong technological foundation and support from influential investors do not guarantee success in the decentralized finance market. For new crypto startups, a clear commercial strategy becomes more important than technological novelty itself.