What really happened to Kadena – inside a collapse no one saw coming

What went wrong inside Kadena — the Wall Street-engineered blockchain that tried to outsmart Bitcoin but collapsed under its own weight?

The day Kadena went dark

The collapse of Kadena marks one of the most abrupt endings in recent crypto history. On Oct. 21, the team behind Kadena announced it would “cease all business activity and active maintenance immediately,” citing difficult market conditions and an inability to sustain operations.

The announcement triggered a rapid fall in Kadena’s (KDA) market value, as the token dropped from $0.225 to nearly $0.056 within hours, erasing over 75% of its price and leaving the project’s future uncertain. 

Centralized exchanges soon began delisting KDA and suspending deposits, with several planning to remove trading pairs by Oct. 29.

Kadena was founded by former JPMorgan blockchain engineers Stuart Popejoy and Will Martino. Their goal was to create a scalable proof-of-work system that maintained Bitcoin-level security while supporting smart contracts. 

The network was built on a framework known as Chainweb, where multiple chains run in parallel and share security to improve transaction throughput.

The design attracted early attention from institutional developers and retail investors. At its peak in 2021, the KDA token traded above $27.60, and the project reached a multi-billion-dollar market capitalization before collapsing 99.8% to around $0.06 as of Oct. 23.

The community reaction to the shutdown has been divided. Many users expressed disbelief, anger, and disappointment, with some calling the event an “exit” rather than a planned handover.

However, the Kadena blockchain itself will continue to operate. The team stated that “independent miners and community developers will keep the network live,” with a final node binary to be released for ongoing maintenance without the company’s involvement. 

They also confirmed that over 566 million KDA remain to be distributed as mining rewards until 2139, while around 83.7 million tokens are set to unlock by November 2029.

That statement means the network will survive in structure but not necessarily in purpose. Kadena now functions as a proof-of-work chain without its founding company, leadership, or funding.

The vision that never scaled

Kadena launched in early 2019 and went live on mainnet around 2020, presenting itself as a scalable proof-of-work blockchain capable of running smart contracts through its braided chain design.

The project aimed to solve the performance bottlenecks seen in early networks and establish itself among the leading layer-1 contenders of that era.

Despite its technical ambition, several weaknesses became evident over time. Kadena’s architecture offered strong theoretical throughput and security but failed to translate that into meaningful real-world adoption.

The network’s decentralized-finance protocols never gained the liquidity or user engagement required to create a self-sustaining ecosystem. According to DeFi Llama, the total value locked on Kadena peaked at around $11 million in August 2022 and fell to roughly $128,000 by October 2025.

Another issue was identity. Competing networks such as Ethereum (ETH) and Solana (SOL) succeeded in building strong developer communities, distinct application verticals, and clear network effects. 

Kadena, in contrast, remained a general-purpose platform without a defined niche. Analysts often described it as “technical novelty without product-market fit,” a condition that limited long-term traction.

Meanwhile, the crypto environment evolved rapidly. Layer-2 networks, modular architectures, and rollups began dominating the scaling conversation, drawing investor and developer attention toward ecosystems offering better composability and liquidity.

There are now more than 100 rollups and over 200 sovereign chains in operation, yet most struggle to attract even 2,000 daily users. The space has become saturated with networks that see little real usage, and Kadena gradually lost both attention and capital as activity shifted elsewhere.

Token economics and governance further complicated matters. The project’s long emission schedule created ongoing supply pressure while demand weakened. Development and governance remained concentrated within the central organization rather than a decentralized community. 

In an attempt to regain momentum, Kadena announced a $50 million grant program in May 2025 to fund Chainweb EVM and tokenization projects. It also launched several protocol updates, including versions 2.27, 2.28, and 2.29 between February and May 2025.

These efforts, however, failed to change the on-chain reality. Developer activity stayed minimal, user participation low, and liquidity almost nonexistent, leaving the network exposed to the eventual market shock that followed.

Allegations cloud Kadena’s final days

The collapse of Kadena has triggered a growing wave of speculation and allegations from within the crypto community. Several traders and self-proclaimed whistleblowers claim that certain members of the Kadena organization may have profited from the project’s downfall.

One widely shared post alleged that “Kadena employees [were] caught red-handed shorting their own token $KDA with leverage right before major announcements,” claiming profits “in the tens of millions” across multiple exchanges. These claims, however, remain unverified.

Speculation about insider behavior intensified after trading data appeared to align with major market movements earlier in October. Around Oct. 10, the broader crypto market fell sharply following President Trump’s new tariff announcements, which triggered a sell-off across risk assets.

Bitcoin (BTC) declined by nearly 12% in two days, while several altcoins lost more than 50%. Kadena’s token dropped from roughly $0.38 to $0.08, ranking among the steepest losses in mid-cap projects.

According to one analyst, “they get liquidated for everything … for almost two weeks they pretend all is okay, meanwhile they open huge leverage shorts … post about ceasing operations … make it all back.”

The situation has already prompted threats of legal action. A post from Kaddex, one of Kadena’s main ecosystem projects, announced plans to organize a class-action lawsuit against Kadena’s directors, accusing them of “irresponsible behavior” and market misconduct.

Outrage, grief, and a flicker of hope

The aftermath of Kadena’s shutdown has unfolded as a mix of outrage and reflection. Across social platforms, long-time holders have expressed deep frustration and anger.

One user wrote, “I was holding this piece of s**t project for years, only for them to dump on everyone. These guys should be thrown in jail.”

Another commented, “A part of me just died tonight. After all these years $Kadena was just a scam like any other rugpull s**tcoin.”

“You totally rug pulled everyone who invested in you and then wouldn’t even turn on comments for the announcement. Classic,” another frustrated user added.

Amid the anger, some industry figures have called for calm and continuity. Daniel Keller, co-founder of the Flux project and one of Kadena’s earliest ecosystem partners, issued a public statement reaffirming his team’s commitment to the network.

He stated that Flux would continue supporting the “Kadena ecosystem and its community,” providing “wallet and technical guidance” while helping shape “a fully community-driven project.”

Keller added that Flux remains guided by “decentralization, transparency, and collaboration,” and would assist in establishing the Kadena Foundation to sustain the network’s operations.

Whether this show of support will lead to an actual revival remains unclear. If the remaining miners, developers, and holders can organize effectively, Kadena may endure as a community-led chain, similar to how Terra Classic survived after its collapse.

However, the economic damage, reputational loss, and lack of institutional backing make such a recovery highly uncertain.