Author: RootData Research
summary
In Q3 2024, the total number of financing events reached 321, a decrease of 25.69% from the previous quarter, and the total financing amount was US$2.406 billion, a decrease of 15.04% from the previous quarter. The infrastructure track continued to lead, with a total financing amount of US$745 million, accounting for 30.9%.Bitcoin prices experienced wide fluctuations in Q3, rising 0.8% from the beginning of the quarter.
The number of medium-sized ($5M-$10M) financing projects decreased by 30.4% month-on-month, and the number of large-scale (greater than $10M) financing projects decreased by 35.8% month-on-month.Iris Energy raised $413 million, becoming the largest single financing in Q3.Robot Ventures was the most active firm in Q3 with 22 investments.The most popular project label for active institutional investments with more than 10 investments is the infrastructure track (39.2%).
Tier 1 funds are considering OTC as an investment theme, and the number of ecological projects such as Solana, Bitcoin, Ton, and Base is leading. With the start of the interest rate cut cycle, the cost of using funds will be lower, and the Ethereum ecosystem will continue to benefit from its leading position in the DeFi track.
Data analysis tools, creator economy, and prediction markets have become emerging hot labels, and the crypto market is more inclined to products with market fit (PMF). The infrastructure track is still the first choice for capital for blockchain, and high concurrency and parallel EVM may become one of the main narratives of the next cycle of public chains.
Monad, EigenLayer and other projects that have received large financing ($50M+) and obtained the approval of leading institutions/exchanges are about to be unlocked, mainly involving L1/L2 infrastructure, LRT and derivative DeFi. However, TGE liquidity was insufficient and selling pressure was severe in the first half of the year. Projects/investors are adjusting their strategies, looking for cash flow and high liquidity to adapt to declining returns and demanding valuation analysis.
Total financing in Q3 was US$2.406 billion, down 15.04% from the previous quarter; total financing in the infrastructure sector reached US$745 million
In Q3 2024, the price of Bitcoin fluctuated widely, rising slightly by 0.8% from the beginning of the quarter. Financing activities in the Web3 primary market remained active, but showed a downward trend month by month. In Q3 2024, there were 321 rounds of financing events in the Web3 primary market, a decrease of 25.69% from the previous month. The total financing amount in Q3 reached US$2.406 billion, a decrease of 15.04% from the previous month.
The average financing amount increased slightly, indicating that institutions tend to focus on investing in high-quality projects. The median financing amount decreased slightly from $4.175 million to $4.15 million, indicating that despite the reduction in the amount of funds, institutions are still actively involved in small and medium-sized projects, and the adoption of a more cautious strategy also led to a decrease in the total financing amount. This may be related to the poor performance of token TGE in the first half of the year or the mismatch between the market valuation of early projects in the primary market and institutional investment.
Although the price of Bitcoin has recovered to the high point of the last bull market in 2024, the scale of funds in the primary market has not reached the same level as in the same period. The continued decline in the scale and number of financing in Q3 may be related to the fact that the market of altcoins did not rise synchronously and the poor performance of tokens in the first half of the year, which affected investor confidence.
According to RootData statistics, the top three tracks in terms of financing amount in Q3 were infrastructure, others and DeFi. The total financing amount of the infrastructure track reached US$745 million, accounting for 30.9% of the total financing amount.
It is worth noting that the total financing in "other" tracks reached US$453 million, accounting for 18.8% of the total financing. There are multiple driving factors behind this phenomenon. The MeMe sector continues to be popular this quarter, the integration projects of AI and Web3 have increased significantly, and the DePin and Bitcoin ecosystems have continued to expand. Investors and markets are looking for more new narratives and innovations. The DeFi track ranked third with a financing amount of US$222 million, accounting for 9.2%, and the financing amount decreased by 31.9% month-on-month. When market funds are limited and investment is focused on attention, the lack of narrative and innovation in DeFi projects has led to a significant decline in financing scale.
The number of large-scale financing projects in Q3 was 43, a year-on-year increase of 13.2%; the total amount of M&A financing in the top 10 reached US$681 million
In terms of the financing amount range, the number of early-stage investment projects (below $5M) in Q3 was 137, down 14.4% from the previous quarter; the number of mid-term investment projects ($5M-$10M) was 55, down 30.4% from the previous quarter. The number of large-scale investment projects (above $10M) was 43, down 35.8% from the previous quarter. This trend may reflect that major institutions have completed their "ambush" plans in Q2, and the scale of investment in Q3 has gradually slowed down. In addition, it is currently difficult for investment institutions to exit. It is expected that the market will have a considerable rise in Q4 or in the short term in the future.
The project with the highest financing amount in Q3 2024 is Bitcoin mining company Iris Energy, which raised $413 million. It is closely followed by Bitcoin mining company Stronghold, which raised $175 million through mergers and acquisitions. The third place is modular blockchain network Celestia, which completed $100 million in OTC financing at a valuation of $3.5 billion. It is worth noting that 3 of the top 10 financing projects are of the M&A type, with a total amount of $681 million, accounting for 57.5% of the total amount of the top 10.
There were 12 investment institutions that made more than 10 investments in Q3, and Robot Ventures was the most active investment institution in Q3 with 22 investments.
According to RootData data, 12 investment institutions that invested more than 10 times in Q3 2024 participated in a total of 160 investments. Robot Ventures topped the list with 22 investments, and its investment projects were hotly labeled as infrastructure and DeFi. Binance Labs and OKX Ventures followed closely behind, both participating in 16 investments. These two leading exchanges participated in GamFi-labeled projects 5 and 6 times respectively, and are more active in this track than other investment institutions.
In general, infrastructure is still the most popular track. These 12 institutions have invested 65 times in this project label, and there are 56 projects related to the DeFi label. In addition, DAO, NFT and Tools & Information projects remain cold.
Tier 1 funds are considering OTC as an investment theme, and the number of ecological projects such as Solana, Bitcoin, Ton, and Base is leading.
In Q3, a single large investment occurred in the OTC market. Combined with the fact that leading projects such as SOL, Near, and Aptos have all issued OTC financing, it shows that more and more Tier 1 funds are considering OTC as an investment theme to hedge against the current difficulties in new projects, liquidity tightening, FDV being questioned and other risks.
Unlike the market's doubts about the Ethereum ecosystem, the Ethereum ecosystem is still the most recognized infra by investors and developers. In Q3, the ecosystem completed 67 financings with a total financing amount of US$481 million. With the start of the interest rate cut cycle, lower capital use costs may promote prosperity on the chain and help the recovery and innovation of the DeFi track, and the Ethereum ecosystem's leading position in this track will continue to benefit it.
According to incomplete data, the number of ecological projects such as Solana, Bitcoin, Ton, and Base is relatively leading, and Ethereum still tops the list of public chains with a total number of applications exceeding 2,500. The crypto market attempts to solve the problem of "high FDV and low circulation" through the Meme economy. Solana shines with Pump.fun, which achieved $100 million in revenue in just 217 days. Binance has listed five Ton ecological projects, including Catizen, Hamster Kombat, and Dogs, and a large number of investors have poured into the Ton ecosystem in a short period of time. The Bitcoin ecosystem may become the next user growth platform. In addition to inscriptions and runes, the infrastructure is developing particularly rapidly (such as Babylon and Fractal).
Data analysis tools, creator economy, and prediction market have become emerging hot labels. High concurrency may become one of the main narratives of the next cycle of public chains.
Based on RootData's popular tags (more than 1,000 clicks), it can be found that the clicks on tags such as data analysis tools, creator economy, and prediction market have increased rapidly. This may be attributed to the market influence of star projects and shows that the crypto market is more inclined to products with market fit (PMF).
Data analysis tools: RootData, SoSo Value, DeFiLlama…
Creator Economy: Story Protocol, Tari, Follow…
Prediction Markets: Polymarket, Limitless, JogoJogo…
Infrastructure is still the first choice for capital in blockchain, and its compliance and development prospects are far superior to other types of blockchain projects. High concurrency and parallel EVM may become the next major narrative of public chains. Projects such as Monad and MageETH are expected to help blockchain TPS values increase exponentially. Traditional giants are still stepping up their layout of the Web3 industry, such as Sony's launch of the L2 network Soneium.
Q4 hot TGE projects revealed that Monad and other tens of millions or hundreds of millions of financing projects can have a return rate of several times to hundreds of times depending on the investment timing
Overview of popular TGE financing in Q4:
Projects with a total financing of more than $100 million include Monad, Farcaster, EigenLayer, Magic Eden, and Berachain;
Projects with total financing between US$50 million and US$100 million include Babylon, Scroll, Morpho, and Eclipse;
Projects with total financing between US$10 million and US$50 million include Movement, Puffer, Walletconnect, and Sophon;
Projects with total financing of less than US$10 million include Roam, Symbiotic, deBridge, and Grass.
Representative institutional investors include CEXs such as Coinbase, Okex, Binance, and leading institutions such as Polychain, Hack VC, IOSG, Robot Ventures, Paradigm, Variant, a16z, and Delphi Digital.
The hot TGEs in Q4 2024 are mainly L1/L2 infrastructure, LRT and derivative DeFi, followed by Solana ecology, RWA and DePIN applications
Overview of popular TGE financing in Q4: Monad received the highest financing and support from 8 leading institutions. It is expected to be launched on Coinbase, Binance and Okex, and the estimated selling pressure is small (32 to 2 times). Eigen received the third highest financing and support from 6 leading institutions. Its multiple after TGE is 43 to 3. Unlike the trend of tokens with higher multiples launched this year, the selling pressure is average, and the valuation and the first round of institutional unlocking are difficult to recover the cost. Projects supported by 4 to 5 leading institutions include Farcaster, Berachain, Scroll, Babylon, Morpho, and Movement. Among them, Scroll, Babylon, and Movement are expected to have higher multiples. They are all supported by CEXs institutions and are expected to achieve good exit liquidity under good market conditions.
Looking at the popular TGE projects in Q4, L1/L2 infrastructure is still favored by the market and institutions, and has obtained a high number of financing and return multiples. Secondly, LRT and derivative DeFi were driven by the research on ETH AVS and interest rate during the bear market, and the return rate and market enthusiasm continued from Q1 to Q4. Solana's ecological application rebounded rapidly after the collapse of FTX in 2021, and it is still supported by institutions and the market. RWA and DePIN were driven by the market recovery and traffic in Q1. Institutions will unlock related tokens in Q4 and achieve considerable returns. Morpho has received more than 5 head support in terms of gain-yield lending, which is worth paying attention to.
TGE liquidity is scarce in the first half of 2024. Pay attention to CEXs projects with insufficient co-investment to deal with the exit channels and liquidity risks of leading projects.
New Narrative & Exit Liquidity: From the cross-analysis of popular TGE projects, it can be seen that the exit channels for projects with financing amounts exceeding US$10 million are basically covered by Coinbase, Okex and Binance. Polychain, Coinbase, Hack VC, OKex, IOSG, Robot, and Paradigm ushered in a large number of project TGEs in Q4. The main problem facing TGEs in the first half of 2024 is the lack of sufficient and effective exit liquidity, so investors should pay attention to projects with low CEXs co-investment numbers and large financing amounts, such as DePIN, Solana ecosystem projects, and LRT projects. In the case of poor market performance, such projects are expected to face selling pressure similar to that in the first half of the year; conversely, when market liquidity is sufficient, these unlocked projects will inject liquidity into the SOL and ETH ecosystems.
The overall financing data in Q3 declined, but institutions are still actively investing. For projects that are about to have TGE, most of the last round of institutional investors in infrastructure may find it difficult to recover their costs in the first round of unlocking due to the poor performance of altcoins, which will cause the flow of such liquidity into the secondary market to be affected by market conditions. On the other hand, the Solana ecosystem, LRT and DePIN are still hot in H1. If the last round of institutional investors can unlock liquidity on Binance, Coinbase and Okex, they are expected to recover their costs in the first round of unlocking and may inject liquidity into high-quality assets and the primary market.
Institutions should pay close attention to the performance of altcoins to adjust their segmentation or boutique investment strategies. Project financing should speed up the pace to actively reduce valuations or enhance the core competitiveness of products (including cash flow or leading effects). Retail investors should pay close attention to projects with high base multiples and pay attention to unlocking the risk of price fluctuations. The industry should consider the impact of short-term price fluctuations caused by the implementation of the general election, interest rate policies, financial annual reports around Christmas, and liquidity withdrawal during the Q2 tax season next year on risky assets.
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