Author: Day
According to rootdata, the amount of funding raised by the crypto industry was $26.77 billion in 2022, with 1,528 fundraisings. However, in the first half of 2023, the amount of funding raised by the crypto industry dropped significantly. In the last six months, the total amount of funds raised in the global crypto market was $4.774 billion, with a total of 497 fundraisings. Compared to 2022, the funding amount has decreased by 80%. On the one hand, the collapse of Luna and FTX has weakened investment institutions’ interest in crypto investments. On the other hand, it is also related to the decline of the overall market.
Source: rootdata.com
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Monthly investment amount, Source: defillama
Most top investment institutions have experienced a 70-80% drawdown in their holdings. In this article, we will briefly understand the investment trend of institutions in the first half of this year and the tracks and projects they have invested in.
ERC-20 Token value held by institutions, Source: dune
Market Financing Performance This Year
1. Financing for institutions:
Related data on the amount and frequency of institutional investment, Source: rootdata.com
According to rootdata, as of early June 2023, the investment situation in various tracks in a total of $3.66 billion of financing is as follows:
- Infrastructure: 139 fundraisings, $1.379 billion raised, accounting for 37.6%;
- Other: 61 fundraisings, $540 million raised, accounting for 14.5%;
- DeFi: 88 fundraisings, $410 million raised, accounting for 11.2%;
- CeFi: 34 fundraisings, $400 million raised, accounting for 10.9%;
- Games: 63 fundraisings, $390 million raised, accounting for 10.7%;
- Social entertainment: 43 fundraisings, $240 million raised, accounting for 6.7%;
- NFT: 52 fundraisings, $160 million raised, accounting for 4.5%;
- Tool & Information services: 31 fundraisings, $110 million raised, accounting for 3.5%;
- DAO: 4 fundraisings, $17 million raised, accounting for 0.5%.
It can be seen that institutions tend to invest in infrastructure and DeFi tracks, while showing relatively weak interest in DAOs, tools & information services, and NFT tracks. Of course, this is also related to the market value ceiling of each track, with infrastructure projects generally having higher valuations than other tracks.
2. Other
Other financing situations, source: cryptorank.io
On the other hand, the platform has raised a total of $210 million in financing from other investors as of June 10.
Proportions of various tracks, source: cryptorank.io
When raising funds from other investors, GameFi and blockchain services have the largest share. Financing is mainly focused on Ethereum, Arbitrum, Polygon, and BNB.
Amount distribution of various chains, source: cryptorank.io
Active investment institutions this year
Source: rootdata.com
Next, we measure which investment institutions are still active this year, continuously in a “money-throwing” state, based on the number of investment projects each institution has invested in.
1.DWF Labs: 30
DWF Labs is a subsidiary of Digital Wave Finance. This year, it has attracted attention for frequently investing in Web3 companies and providing token on-line, market-making, and OTC trading solutions. It has been traded on more than 40 top trading platforms and is ranked among the top 5 in global cryptocurrency trading volume.
This year, it has invested in a total of 30 projects, involving funds of more than $300 million (since some projects may have multiple institutions investing and some project financing amounts are not disclosed, only part of it can be calculated, the same below). DWF Labs tends to invest in projects that have issued tokens and are already listed on trading platforms, such as EOS, ACH, CFX, and FET.
2. Coinbase Ventures: 24
Coinbase Ventures is the investment arm of Coinbase, dedicated to advancing outstanding entrepreneurs in the crypto/Web3 ecosystem and supporting Coinbase’s mission to create more economic freedom in the world. This year, it has invested in 24 projects, involving nearly $200 million in funding.
Coinbase Ventures invests more in basic infrastructure, such as the Ethereum recommitment EigenLayer, cloud platform Chaos Labs, and the DEX Mauve that provides traditional financial compliance.
3. HashKey Capital: 21
HashKey Capital belongs to the Hong Kong digital asset group HashKey Group, headquartered in Hong Kong, China. HashKey Capital invests in the entire blockchain ecosystem, including underlying public chains, protocols, applications, and crypto financial providers. Its investment and consulting help start-ups targeting developers, enterprises, and end-users to expand in Asia. This year, it has invested in 21 projects, involving nearly $130 million in funding.
HashKey Group invests in infrastructure, games, NFT, and other tracks, such as cloud platform Chaos Labs, Karate Combat, infrastructure PolyHedra, and cross-chain NFT platform Tabi.
4. Shima Capital: 19
Shima Capital is a venture capital firm headquartered in San Francisco, specializing in seeking early-stage cryptocurrency and blockchain start-ups and providing them with financial and resource support.
This year, it has invested in 19 projects, involving nearly $100 million in funding. Shima Capital invests in infrastructure, NFT, and entertainment games, among which six are related to games. The larger investments include public chain Berachain and Monad.
5. Polygon Ventures: 18
Polygon Ventures is dedicated to supporting visionary teams in the Polygon ecosystem and multi-chain ecosystem. By cooperating with Polygon’s operational, technical, distribution, and strategic partnership strengths, it helps projects succeed.
This year, Polygon Ventures has invested in 18 projects, involving more than $80 million in funding. Polygon Ventures invests in infrastructure, entertainment games, and NFT fields, among which 10 are related to entertainment games. Larger investments include cloud platform Chaos Labs and Web3 game platform Intella X.
6. Balaji Srinivasan (individual investor): 18
Balaji S. Srinivasan is known as a top angel investor in the crypto space. He was formerly the CTO of Coinbase and a general partner at A16z, and has been an early investor in many successful tech companies and crypto protocols, including Alchemy, Ava Labs, Chainlink, Clubhouse, Dapper Labs, Ethereum, Instadapp, NEAR Protocol, Opensea, Solana, and more. Srinivasan is also a co-founder of Earn.com (acquired by Coinbase), Counsyl (acquired by Myriad), Teleport (acquired by Topia), and Coin Center.
Balaji S. Srinivasan invested in a total of 18 projects this year, involving nearly $120 million in funds. Srinivasan’s investments are mainly in infrastructure, with larger investments in cloud platform Chaos Labs, trust layer based on zero-knowledge proofs Proven, decentralized social Lens Protocol, and encrypted asset insurance company Evertas.
7. Animoca Brands: 16
Animoca Brands is a web3 gaming software and venture company. Known for The Sandbox, Animoca Brands aims to provide digital property to global gamers and internet users, creating a new asset class, an economy where people can make money through games, and a fairer digital framework, contributing to the construction of an open meta world.
Animoca Brands invested in a total of 16 projects this year, involving approximately $110 million in funds. Animoca Brands invests in infrastructure, NFTs, and gaming. Larger investments include NFT super app OP3N, encrypted payment gateway Transak, web3 gaming platform Intella X, and cross-chain NFT platform Tabi.
8. NGC Ventures: 16
NGC Ventures is a venture capital firm focused on investing in blockchain and distributed ledger technology. NGC Ventures invested in a total of 16 projects this year, involving $170 million in funds. The investment focus of NGC Ventures is on infrastructure and DeFi. Larger investments include LayerZero, a full-chain interoperability protocol, and PolyHedra, a web3 interoperability infrastructure.
9. Big Brain Holdings: 15
Big Brain Holdings is a crypto fund that invests in seed pre-, seed, and early-stage projects. The fund believes in the future of crypto assets and invests in teams that pave the way for that future. The team focuses on unique, innovative, and cutting-edge projects in the blockchain space.
Big Brain Holdings invested in 15 projects this year, involving approximately $60 million. Big Brain Holdings invests in areas such as infrastructure, DeFi, NFTs, and games. The larger investments include Web3 game platform Intella X and multi-chain L2 network zkLink, which focuses on trading.
Major financing projects this year
Next, let’s take a look at the financing projects that exceeded $50 million this year. After all, in a market like this year’s, being able to raise so much money means that the quality of the project itself shouldn’t be too bad. However, the water of investment institutions is still a bit deep, as the official announcement of how much money was invested and whether the project was actually paid is not clear. Did they provide support such as resources instead of payment? It is difficult for retail investors to know the specific situation. Let’s use it as a reference. The following will introduce each project in order of the amount of financing. Some projects have undergone multiple rounds of financing, and investment institutions only introduce the money invested this year.
Source: rootdata.com
1. Metaco: Acquired by Ripple for $250 million
METACO is a Swiss digital asset custodian. The business scope of Metaco covers multiple markets around the world. Customers include global custodians, large banks, financial institutions, and other enterprise institutions. Its core digital asset custody product “Harmonize” can help investors manage the entire DeFi ecosystem, including custody, trading, tokenization, pledging, and smart contract management. The platform seamlessly connects institutions with the DeFi new world. This acquisition will enable Ripple to expand its products by integrating the technology into the custody, issuance, and settlement of tokenized assets.
2. Blockstream: Debt financing of $125 million
Investment institutions: Kingsway Capital, Fulgur Ventu.
Blockstream is an old-fashioned Bitcoin and blockchain infrastructure development company founded in 2014. Its core is to develop new infrastructure for traditional financial systems, and key developments revolve around Bitcoin sidechains and other blockchain-related applications. It has launched many products such as Bitcoin sidechain Liquid, Bitcoin wallet Blockstream Green, encrypted transaction data products, and Bitcoin block production custody services. Blockstream will use the new financing funds to expand its mining facilities to meet strong demand for its institutional custody services.
3. LayerZero: $120 million Series B funding, with a valuation of $3 billion
Investors: a16z, Sequoia Capital, Christie’s, and Circle Ventures, among others.
LayerZero, launched in 2021, is a cross-chain interoperability protocol that focuses on data and message transmission between chains. It aims to transmit lightweight messages between various blockchains through efficient gas usage and non-upgradable smart contracts. Currently, the LayerZero protocol has a good network adoption rate, supporting a total of more than 30 chains such as Ethereum, BNB Chain, and the ecosystem is expanding rapidly, making significant progress in DeFi, NFT, cross-chain bridges, and other areas.
4. Worldcoin: $115 million Series C funding
Investors: Blockchain Capital, a16z Crypto, among others.
Worldcoin, founded by Sam Altman, co-founder of ChatGPT, is a cryptocurrency project founded in 2020. It aims to become the world’s largest and most inclusive cryptocurrency asset network by providing Worldcoin to everyone for free. Worldcoin consists of three main parts:
- World ID: A decentralized identity protocol that protects privacy.
- Worldcoin (WLD): A globally distributed token that is distributed for free and has governance value.
- World App: A wallet for payments, purchases, and transfers worldwide.
Currently, due to issues such as data privacy, Worldcoin has received mixed reviews.
5. Ledger: $108 million Series C1 funding, with a valuation of $1.416 billion
Investors: True Global Ventures, Cité Gestion SPV, among others.
Ledger is currently one of the most well-known hardware wallet companies in the cryptocurrency industry. Since its establishment in 2014, Ledger has sold over 6 million devices, with customers in more than 200 countries worldwide. Recently, it caused huge dissatisfaction in the community due to the release of key recovery services.
7. Auradine: $81 million Series A funding, with a valuation of $500 million
Investors: Celesta Capital, Mayfield, among others.
Auradine, founded by Rajiv Kheman (whose previous company iInnovium was acquired by Marvell for $1.1 billion), was established in 2022 and is an infrastructure solution provider that mainly researches and develops cutting-edge technologies such as energy-saving silicon, privacy, zero-knowledge proof, and artificial intelligence.
8. Chain Reaction: $70 million Series C funding
Investment firms: Morgan Creek Digital, Hanaco Ventures, etc.
Chain Reaction is a blockchain chip startup that is designing disruptive blockchain and privacy technologies for the future. The company partners with cloud service providers and data centers to use customized ASIC and system-rebuilt computing infrastructure to optimize energy efficiency and high-performance computing. The solution is specially built and custom-designed to support next-generation secure, scalable, and green computing to help protect humanity, privacy, and the Earth.
9. Taurus: $65 million Series B funding
Investment firms: Credit Suisse, Arab Bank Switzerland, etc.
Taurus provides enterprise infrastructure to issue, custody, and trade any digital assets, including pledged, tokenized assets, and digital assets. Taurus also operates a regulated private asset and tokenized securities marketplace. The Taurus fundraiser aims to further develop its digital asset platform and drive international expansion.
10. QuickNode: $60 million Series B funding, $800 million valuation
Investment firms: 10T Holdings, LLC, Tiger Global, etc.
QuickNode is a Web3 infrastructure platform that helps developers and businesses build, launch, and scale blockchain-based applications (dApps). Since 2017, it has worked with hundreds of thousands of top developers and companies to help scale DApps. This funding will be used to accelerate the company’s global expansion, further enhance builder’s capabilities, and lay the foundation for a decentralized, globally interconnected future.
11. Unchained Capital: $60 million Series B funding
Investment firms: Valor Equity Blockingrtners, NYDIG.
Unchained Capital is a bitcoin-native financial services company that offers collaborative custody, trading desk, bitcoin-backed loans, and bitcoin retirement accounts. According to the company, Unchained currently protects over $2 billion in bitcoin through thousands of keys.
12. EOS: $60 million funding
Investment firms: DWF.
DWF Labs supports the EOS network through a $45 million EOS token purchase agreement and a $15 million investment commitment to invest in EOS-based enterprises and projects, which is intended to accelerate the expansion and adoption of the EOS network.
12. Magic: $52 million strategic financing
Investment institutions: BlockingyBlockingl Ventures, Cherubic, Synchron, and others.
Magic provides enterprise clients with non-custodial wallet infrastructure, enabling them to securely onboard customers to the Web3 ecosystem. It offers end-to-end web3 onboarding capabilities, including identity verification, fiat on-ramp, NFT minting, and NFT checkout. Its solutions are trusted by top brands in the web2 and web3 space, including Mattel, Macy’s, Xsolla, Immutable, and others. To date, Magic has created over 20 million wallets and has been used by over 130,000 developers.
13. EigenLayer: $50 million Series A financing, valued at $500 million
Investment institutions: Blockchain Capital, Coinbase Ventures, Polychain Capital, and others.
Eigenlayer is a re-staking protocol built on Ethereum, allowing Ethereum nodes to re-stake their staked ETH to earn additional rewards. Externally, it also allows users to stake their ETH, LSD-ETH, and LP tokens on other public chains, oracles, middleware, etc., as nodes and receive validation rewards.
Summary
Above is the investment and financing situation of the crypto market in the first half of 2023. It can be seen that large-scale financing is mainly concentrated in the basic protocol field. DeFi, NFT, and gaming projects are not among them, but this is also related to the different ceiling of each track project.
Recently, many people started to ridicule institutional investment, saying that institutional coins are generally overvalued, low in circulation, and reach their peak as soon as they are listed. Retail investors always play the role of catching up, and institutions mass-produce projects and then dump them on retail investors. Some investors have complained and started to chase various “meme” and other “local dog” projects.
Just like the recently claimed “water drop crowdfunding” SUI, after the mainnet went live, more than 58.88 million SUIs have been produced, and the selling pressure has continued, and the price has been falling all the way. Investors can no longer catch up.
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