Most Blockchain Ecosystems Fail - And Governance Is Why

Aalto University researchers analyzed 81 interorganizational blockchain projects across 25 industries. Their dataset - 155 interviews, archival records on 196 project trajectories, and 70 podcast interviews with practitioners - produced the most comprehensive empirical account yet of why multi-firm blockchain collaborations collapse. The short answer: governance design, not technology, determines whether these ecosystems live or die.

The study by Hakanen, Eloranta, Shaw, and Töytäri develops a grounded theory around a central finding that most participants won't say out loud. Blockchain promises decentralized coordination, but the organizations joining these networks still operate under centralized logic. That tension doesn't resolve itself.

Three Tradeoffs That Kill Projects

The researchers identified three governance tradeoffs sitting at the core of ecosystem breakdown.

First, consistency versus flexibility in coordination. Blockchain's whole value proposition rests on enforcing uniform rules across participants. Smart contracts don't negotiate. But real organizations need room to adapt - different regulatory environments, different legacy systems, different operational rhythms. When the protocol demands rigid consistency and the participants need flexibility, coordination stalls. Scale amplifies this problem. A five-member consortium can work through exceptions manually. A fifty-member network cannot.

Second, system-level trust versus actor-level control. Blockchain replaces interpersonal trust with system-based verification - tamper-evident records, cryptographic proofs, shared truth. In theory. In practice, incumbent firms join these ecosystems precisely because they want more control, not less. They want verifiable data on competitors while retaining discretion over their own. When system transparency collides with actor-level control needs, trust fractures along predictable lines. Co-opetition - competitors collaborating on shared infrastructure - makes this worse.

Third, incentive misalignment around value creation and capture. Blockchain ecosystems generate collective value through network effects and shared data pools. But individual firms need to capture enough value to justify the cost of participation. Tokenization and transparent contribution tracking can help, but only when participants agree on what counts as contribution and how rewards distribute. They rarely do. Divergent value logics - one firm optimizing for efficiency, another for market access, a third for regulatory compliance - turn the incentive structure into a contested space rather than a coordination mechanism.

Boundary Conditions Matter More Than You Think

The paper's sharpest contribution lies in mapping the boundary conditions that amplify or attenuate each tradeoff. Scale and cohesion shape the coordination tension: small, cohesive groups tolerate rigid protocols better than large, heterogeneous ones. Co-opetition dynamics determine whether system trust holds: direct competitors sharing a blockchain face fundamentally different trust calculus than firms in complementary positions. Value logics dictate incentive stability: ecosystems with aligned commercial objectives sustain participation; those with divergent logics bleed members.

None of this is obvious from the technology alone. You can't read a whitepaper and predict whether the governance will work. You have to understand who's in the room and what they're optimizing for.

The TradeLens Problem, Scaled

These findings resonate with the most visible blockchain ecosystem failures. IBM and Maersk's TradeLens - the shipping industry's highest-profile blockchain initiative - shut down in late 2022 after failing to achieve industry-wide adoption. The postmortems pointed to exactly the dynamics this study formalizes: stakeholders couldn't agree on data ownership, rivals wouldn't cede control to Maersk-adjacent infrastructure, and the governance model couldn't flex enough to accommodate the heterogeneity of global logistics players.

But TradeLens was just one case. The Aalto team's dataset covers 196 project trajectories. The patterns repeat across healthcare, automotive, financial services, and manufacturing. Enterprise blockchain's failure rate isn't a series of isolated mistakes. It's a structural problem embedded in how these ecosystems are governed.

Design Principles, Not Silver Bullets

The researchers offer design principles for navigating these tradeoffs rather than eliminating them. That framing matters. Governance tensions in blockchain ecosystems aren't bugs to fix - they're inherent features of coordinating competing organizations through shared digital infrastructure. The practical question isn't whether tradeoffs exist but whether the governance architecture acknowledges and manages them.

What remains unresolved is whether any governance design can simultaneously satisfy the coordination needs of large-scale ecosystems while preserving the actor-level autonomy that makes firms willing to join in the first place. The study provides the clearest map yet of where these tensions live. Whether practitioners can actually navigate the terrain is a different question entirely.

Sources: Hakanen, Eloranta, Shaw & Töytäri, grounded theory study (155 interviews, 81 projects, 25 industries); Frontiers in Blockchain reporting on TradeLens failure analysis (2025); Journal of Operations Management research on blockchain provider success/failure (Zhan et al., 2025); Lumineau, Wang & Schilke, Organization Science (2021).