Is the bear market the time to build positions? Cryptocurrency financing halved in the first half of 2023, but unexpected dark horse investors emerged.

Recently, there has been shocking news from the Sequoia Capital venture capital team. Two cryptocurrency investors have resigned, and these two investors had invested in the collapsed cryptocurrency exchange FTX, causing Sequoia Capital to lose $214 million. The turmoil at Sequoia Capital also reflects the investment and financing situation in the cryptocurrency market in the first half of this year. According to data from the first half of the year, the overall investment and financing situation was bleak, with the financing amount nearly halved compared to the previous period.

However, it is not all bad news. The turbulent market is also considered the best time for investment. In the first half of this year, the VC circle still saw a “dark horse” – DWF Labs, which made a total of 32 investments, far exceeding other investment institutions. Moreover, it claimed on its official website to invest in an average of 5 projects per month regardless of the market conditions.

On the other hand, in the first half of this year, the cryptocurrency secondary market emerged from the shadow of the deep bear market last year. The price of Bitcoin rose from a low point of 16,477.6 USDT to a high of 31,550 USDT, with a maximum increase of over 90%. This upward trend brought some relief to investors. Perhaps, as the secondary market moves out of the bear market, the investment and financing situation in the primary market will improve in the second half of the year.

1. Bleak overall situation, financing amount nearly halved

First, let’s take a look at the overall investment and financing situation in the market in the past half year. Since the collapse of LUNA and FTX last year, the global cryptocurrency market has entered a deep bear market. Whether it is Bitcoin or NFT, whether it is the primary market or the secondary market, it can be said to be in a sorry state. From the data, it can be seen that both the financing amount and the number of financing events have declined significantly compared to the second half of last year, with the financing amount decreasing by 46.1%, nearly halved.

2. Investment amount and number show a downward trend, infrastructure remains the hottest track

From the trend, both the number and amount of investments have been declining for five consecutive quarters since the first quarter of last year. Currently, institutions are still cautious about investment, and there are no signs of the “bear market” in investment and financing hitting bottom.


In terms of track classification, infrastructure is still the most popular among institutional investors, ranking first in both financing amount and number of times. However, when comparing the average amount of financing per transaction, CeFi has the highest average financing amount. It seems that although CeFi has fewer financing events, each time it can raise a considerable amount.


If we look at it from a vertical perspective, the financing amount of all tracks is showing a downward trend.


Unit: billion USD. Source: ROOTDATA

The number of financing rounds has rebounded slightly this year, but it still lags behind the previous high.


Number of financing rounds in each track. Source: ROOTDATA

From the perspective of projects, the top ten projects in terms of financing scale are Blockstream (infrastructure), LayerZero (infrastructure), Worldcoin (digital currency), Ledger (infrastructure), Auradine (infrastructure), Chain Reaction (infrastructure), Taurus (infrastructure), Salt Lending (CeFi), Unchained Capital (CeFi), and EOS (infrastructure).


Surprisingly, among the top ten funded projects, 7 are in the infrastructure track, 2 are in CeFi, and 1 is in digital currency. It seems that infrastructure deserves to be the most favored track by investors. The prosperity of Web3 applications requires strong and robust infrastructure as a guarantee. In periods of uncertain industry prospects, investing in “shovels” is often the optimal choice.

III. “Dark horse” investors emerge in the market, investing in 32 projects in six months with generous moves

According to our incomplete statistics, the institution with the most investment rounds in the first half of this year is DWF Labs, with a total of 32 investments, making it the “dark horse” in this year’s VC circle.

Investor investment rounds. Source: ROOTDATA

DWF Labs is not a traditional giant, but an emerging investment institution established in 2022. DWF Labs is a Web3 venture capital and market maker, providing market-making, secondary market investment, early-stage investment, over-the-counter (OTC) trading services, token listing, and consulting services for Web3 companies.

DWF Labs’ investment philosophy is somewhat radical, as stated on its official website, “Investing in an average of 5 projects per month regardless of market conditions.” Andrei Grachev, Managing Partner of DWF Labs, stated in an interview that the current turbulent market is the best time to enter the investment field, and they have accumulated enough funds from profits to invest in projects. In most cases, DWF Labs invests in projects by directly purchasing tokens.

In addition, DWF Labs is part of Digital Wave Finance (DWF), which is one of the world’s top cryptocurrency traders, trading spot and derivatives on more than 40 top exchanges. Perhaps the strong background is also an important source of confidence for this “newcomer” to make aggressive moves in a bear market.

It is worth noting that the famous investment institution a16z did not appear in the top ten rankings. In the first half of 2023, a16z made a total of 14 investments, significantly less than the 25 investments in the second half of last year. The decrease in the number of investments by a16z may also be another reflection of the bear market in the entire crypto market.

Now let’s take a look at the “investment preferences” of some well-known investment institutions:

Investment landscape of HashKey Capital. Source: ROOTDATA

HashKey is particularly fond of infrastructure, accounting for over one-third of all investment projects, at 34%. The second and third preferences are DeFi (17.6%) and CeFi (9.4%) respectively.

Investment landscape of Coinbase Ventures. Source: ROOTDATA

Coinbase Ventures also favors investing in infrastructure (at a proportion of 29.4%), but compared to HashKey, their investments are more evenly distributed. The second preference is DeFi (24.9%) and the third preference is CeFi (11.6%), both higher than HashKey.

Investment landscape of Circle Ventures. Source: ROOTDATA

Circle Ventures prefers to invest in both DeFi and infrastructure, with both accounting for 30.6%. The third preference is CeFi (13.3%).

Investment landscape of a16z. Source: ROOTDATA

Unlike the preferences of the previous three institutions, a16z’s investment preferences are more unique. Unlike the focus on infrastructure, DeFi, and CeFi of the previous three institutions, a16z’s second and third preferences are for gaming and NFT. a16z’s investments are also more evenly distributed. Apart from dominating in infrastructure (28.3%), the proportions of investments in Games (13.3%), NFT (11.8%), DeFi (11.8%), and Social & Entertainment (11%) are similar.

IV. Top Ten Most Popular Projects

In the first half of this year, the top ten projects with the highest financing amounts are as follows:

1. Blockstream

Blockstream is a leading blockchain development company founded in 2014. Blockstream’s core focus is to develop new infrastructure for traditional financial systems, with key developments revolving around Bitcoin sidechains and other blockchain-related applications. Their flagship technologies include their implemented Lightning protocol and Elements Project, a blockchain platform that supports open-source sidechains. Blockstream has launched many products such as Liquid (a Bitcoin-based inter-exchange settlement network), Blockstream Green (a secure Bitcoin wallet), and other products that provide real-time and historical cryptocurrency trading data, as well as hosting services for Bitcoin mining operations.

Investors include well-known investment firms such as Blockchain Capital and Ethereal Ventures.

2. LayerZero

LayerZero is a fully interoperable protocol designed for lightweight cross-chain messaging. LayerZero provides trusted and secure messaging with configurable decentralization.

Investors include Coinbase Ventures, Circle Ventures, Binance Labs, a16zCrypto, and FTX Ventures, among others. It seems that many top institutions have high hopes for this project.

3. Worldcoin

Worldcoin is a new global cryptocurrency designed to become the world’s largest and most inclusive cryptocurrency network by providing Worldcoin to everyone for free. Worldcoin has built a device called Orb, which captures an individual’s eye image and converts it into a short digital code to check if the person has registered. If not, they will receive free Worldcoin shares. The original image does not need to be stored or uploaded.

Investors include Coinbase Ventures, a16z Crypto, Blockchain Capital, etc.

4. Ledger

Ledger is a cryptocurrency hardware wallet company that develops secure and infrastructure solutions for individuals and companies using unique proprietary technology, as well as blockchain applications.

Investors include Blockchain Capital, etc.

5. Auradine

Auradine is dedicated to developing groundbreaking scalability, sustainability, and security solutions for future internet infrastructure, supported by revolutionary blockchain, security, zero-knowledge, and artificial intelligence technologies.

Investors include DCVC, Mayfield, etc.

6. Chain Reaction

Chain Reaction is designing the future of disruptive blockchain and privacy technologies by accelerating computational performance. The company collaborates with cloud service providers and data centers to optimize energy efficiency and high-performance computing using custom ASICs and system-transformed computing infrastructure. Its 3PU™ (Privacy Protecting Processing Unit) greatly accelerates real-time operations on encrypted data for privacy-enhancing technologies, transforming the cloud into a trusted environment, enabling vertical industries relying on privacy big data to use the cloud (including financial institutions, healthcare and pharmaceuticals, defense and government, and oil and gas).

Investors include Morgan Creek Digital, Hanaco Ventures, etc.

7. Taurus

Taurus provides enterprise-grade infrastructure to issue, custody, and trade any digital assets, including staking, tokenized assets, and cryptocurrencies. Taurus also operates a regulated private assets and tokenized securities marketplace.

Investors include Tezos, Credit Suisse, etc.

8. Salt Lending

SALT lending offers personal and business loans to members who use blockchain assets as collateral.

9. QuickNode

Unchained Capital is a Bitcoin-native financial services company that provides collaborative custody, trading desks, Bitcoin-backed loans, and Bitcoin retirement accounts.

Investors include Valor Equity Partners, NYDIG, etc.

10. EOS

The EOS public blockchain is built on the EOSIO open-source software framework, enabling developers to create decentralized applications for the real world.

Investors include DWF Labs, etc.


Looking at the overall primary market investment and financing situation, off-market investors lack confidence in the entire cryptocurrency circle, with both the amount and quantity of investments significantly declining compared to previous years. However, even in such a poor market, there are still aggressive players like DWF Labs who are aggressively “bottom fishing,” which truly embodies the investment philosophy of “others fear, I greed.”

R3PO believes that it is not advisable to be too pessimistic about the dismal primary market situation, as the secondary market has gradually emerged from the bear market’s shadow. Generally speaking, the investment conditions of the primary and secondary markets will not deviate from each other for a long time, and the profitability effect of the secondary market will inevitably be transmitted to the primary market. Therefore, even in the deep bear market, it is important to remain sensitive to the investment and financing situation. Tracking the projects and tracks that investors love the most may be the ignition point for the next round of crypto bull market.

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