Original | Odaily Planet Daily
Author | How to be a husband
Will the third quarter of this year be the last darkness before the dawn of cryptocurrency?
At the macro level, despite repeated inflation in the United States in Q3, the Federal Reserve's interest rate hike is expected to be nearing its end, and interest rates are expected to remain stable after this year; the U.S. SEC still holds biases towards the crypto industry, but the boundaries of the regulatory framework are becoming clearer; encryption policies in Singapore, Hong Kong and other regions are also gradually improving.
From the perspective of the crypto market, the lending scandal of the Curve founder has had a great impact on the DeFi track, especially in the lending field, where leading projects have introduced contraction policies; the NFT market is still bleak, with "monkey" prices constantly hitting new lows and blue chips mostly ignored; in terms of CeFi, major projects are constantly meeting the regulatory requirements of many countries.
From the data, Bitcoin and Ethereum experienced historic lows in price volatility in the third quarter; DeFi TVL was US$38 billion, and TVL changes have become more stable since 2023.
It can be said that in the third quarter of 2023, the crypto market was as dull as water.
The secondary market is relatively quiet, and the primary market is not very active. The amount and number of financings are declining, but the rate of decline is slowing down. Institutions are more cautious in their actions, and are more conservative in terms of both the number and amount, but the AI+ field has attracted much attention.
Looking back at Q3 primary market investment and financing activities, Odaily Planet Daily found that:
● Since 2022, the amount of financing in the crypto market has continued to decline, but the rate of decline has slowed down;
● The number of financings in Q3 was 232, with a total disclosed financing amount of US$1.725 billion;
● AI tools are developing rapidly, and AI+ may become the focus of a new round of project development;
● Investors are more cautious, with only Binance Labs and a16z investing more than 10 times;
● Projects invested by Paradigm were relatively popular among the financing projects in Q3, represented by Flashbots and friend.tech.
Note: Odaily Planet Daily divides all projects that disclosed financing in Q2 (the actual closing time is often earlier than the news release) into 5 major tracks based on the business type, service object, business model and other dimensions of each project: infrastructure, application, technology service provider, financial service provider and other service providers. Each track is divided into different sub-sectors including GameFi, DeFi, NFT, payment, wallet, DAO, Layer 1, cross-chain and others.
The amount of funding in the crypto market continues to decline, but the rate is slowing down
From the first quarter of 2022 to the third quarter of 2023, the financing events and financing amounts in the global crypto market have generally shown a downward trend (excluding fund raising and mergers and acquisitions). The third quarter of 2023 fell by 64.71% compared with the third quarter of 2022, but the overall downward curve has become flat, and the primary market as a whole is in a stable development stage.
The number of financings in Q3 was 232, with a total disclosed amount of US$1.725 billion
According to incomplete statistics from Odaily Planet Daily, from July to September 2023, there were 232 investment and financing events in the global crypto market (excluding fund raising and mergers and acquisitions), with a total disclosed amount of US$1.725 billion, distributed in infrastructure, technology service providers, financial service providers, applications and other service providers. Among them, the financial service provider track obtained the largest amount of financing, which was US$525 million; the application track had the largest number of financing transactions, which was 103.
The above chart shows to a certain extent that the Q3 application track has become a hot field, and more developers and entrepreneurs have shifted from the infrastructure field to the application field, which may indicate that the Web3 infrastructure has the soil to support the rapid development of upper-level applications to a certain extent; the financial services track is closely linked to the traditional financial industry, and has opened up multi-faceted channels for receiving new money in the next bull market.
DeFi and underlying infrastructure are favored by investors, and AI tools are developing rapidly
According to incomplete statistics from Odaily Planet Daily, financing events in the segmented tracks in Q3 were concentrated in DeFi, underlying infrastructure and tools, accounting for nearly half of the total financing events, including 46 transactions in the DeFi track, 30 transactions in the underlying infrastructure track, and 28 transactions in the tool track.
Judging from the distribution of financing amounts in sub-tracks, investment trends tend to be diversified, but DeFi and underlying infrastructure are still important areas for capital layout.
In the DeFi track, DEX is more inclined to the order book model, and the representative project is Brine Finance; the number of financings in the lending track is relatively evenly distributed; the number of financings in the derivatives platform direction is relatively large, at 13. The decentralized derivatives platform has always been a relatively blue ocean market in the DeFi field.
Although the DeFi track had a large number of financing transactions in the third quarter, the leading investors in the crypto market did not pay too much attention to it. They mainly focused on supplementing the ecological supporting facilities and have not yet discovered any potential projects.
The infrastructure track also received capital favor, with a total of 30 financings, ranking second. Among them, the MEV segment has entered the public eye. The MEV field has been sought after by capital through Paradigm's intent-centric concept, and the representative project is Flashbots.
In addition, the financing news of the tool track is also very active, with a total of 28 deals, ranking third. Since the rapid development of AI, AI+tools have been sought after by capital, and the AI-assisted encryption market has gradually matured, among which AI+data analysis projects have developed rapidly.
The largest single investment amount is $300 million (Ramp)
According to incomplete statistics from Odaily Planet Daily, the financing amount of the sub-tracks in Q3 was led by the payment track, while other tracks tended to be flat. The financing amount of the payment track was US$347 million.
In the bear market, when the overall financing volume is relatively low, the financing amount of a single project has a greater impact on the financing trend of the sub-track. In order to avoid large errors in analysis, the Q3 financing amount analysis will focus on the introduction of the TOP 10 projects. The following figure shows the projects divided according to the sub-tracks, and also includes traditional companies involved in encryption business.
● Ramp provides fiat payment infrastructure between crypto markets and traditional financial markets.
● BitGo is a cryptocurrency custody platform and is currently the custodian for FTX creditors.
● Flashbots is a MEV infrastructure service provider that aims to mitigate the negative externalities and existential risks that MEV brings to the smart contract blockchain.
● Futureverse is a metaverse infrastructure platform that combines AI with blockchain and aims to become a portal to Web3.
● Core Scientific is one of the largest blockchain data center providers and digital asset miners in North America.
● RISC Zero is Layer 1 built through zero-knowledge proof.
● Proof of Play is the developer of the GameFi project, and its current representative project is Pirate Nation.
● Cosmic Wire is a Layer 1 focusing on entertainment, metaverse and other fields.
● ZetaChain is a Layer 1 that focuses on multi-chain and cross-chain.
Ethereum mainnet ecosystem still dominates in terms of number of projects funded, but is facing challenges
According to RootData statistics, the ecosystem project with the most financing projects in the figure below is Ethereum, with a total of 51 projects in Q3. The ecosystems that received more investment later are: BNB chain (32), Polygon (25), Arbitrum (25), Avalance (18), Optimism (17), and Solana (9).
The above chart shows that although Ethereum is in the leading position in the number of invested projects, most of them are already established projects, and the choice space for new projects is gradually moving towards Layer 2 or other Layer 1.
With the continuous development of Layer 2 and the impact of EVM-compatible Layer 1, Ethereum may gradually move from the front stage to the backstage and eventually become a settlement layer that provides security.
Investors are more cautious, with only Binance Labs and a16z investing more than 10 times
As the number of financings decreases, market expectations are unclear, and investment institutions are more cautious about their investment behavior. In Q3, only 2 institutions made more than 10 investments, of which Binance Labs made 12 investments and a16z made 11 investments. The track with the most investments from the top 10 investors is infrastructure.
In addition, judging from the popularity of projects and market attention, the biggest winner in investment in Q3 was Paradigm, which only made two investments but bet on the intent-centric Flashbots and social application friend.tech, which were popular in Q3.
