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Binance Research: Data Insights on Cryptocurrency Financing Overview.

Binance Research

23-11-15 16:46

Read this article in 19 Minutes

Source: Binance Research

Key Points

"Data Insights: Overview of Cryptocurrency Financing" is a compilation of financing charts and insights from the past year by Binance Research.

1. Overall trend: With financing gradually stabilizing, there are optimistic signs.

Despite the downward trend in 2023, the market has shown resilience with stable growth in trading and investment. In this sustained growth, chain games and infrastructure projects have taken a considerable share.

2. Detailed Introduction to Venture Capital: Traditional Venture Capital Enters Web3.

Since the beginning of this year, the proportion of traditional VCs participating in investments has increased to 45%, and the gap between traditional VCs and Web3 investors has gradually narrowed. Hack VC is a leading player among traditional venture capital firms, with diversified investments in areas such as gaming and infrastructure.

3. Popular projects categorized by sector: Infrastructure financing remains at the top of the list.

In the past four quarters, infrastructure projects have consistently been the most funded track, with the total quarterly financing amount increasing from 26% in Q4 22 to 44% in Q3 23.

Overall Trend

Reviewing the financing trends of the past few years

The number of transactions and capital investment within a specific time period.

Source: Messari, RootData, and Binance Research. Data snapshot as of September 30, 2023.

· During the hot bull market in early 2021 and 2022, the total amount of financing continued to increase. The financing amount reached its peak in April 2022, reaching $6.8 billion, an increase of 361.8% compared to the amount in January 2021.· However, due to the FTX thunderbolt incident, financing funds plummeted between the second and third quarters of 2022, with a total investment of only $2.4 billion in the third quarter. After this decline, the level of financing funds stabilized.

· However, the amount of trading funds increased in January and February 2023, mainly due to the significant growth in infrastructure and Web3 gaming.

Seed round financing accounts for more than 30% of investment

The number of transactions in different financing rounds in each quarter.

Source: Messari, RootData and Binance Research. Data snapshot as of September 30, 2023. "Other" refers to undisclosed financing, private token sales, and mergers and acquisitions.

· The total number of transactions reached its peak in the first quarter of 2023, with 272 transactions, and then decreased to 169 transactions in the third quarter of 2023, a decrease of 37.9%.

· The proportion of seed round financing in the last quarter soared to 47.9%. Despite a decrease in overall transaction volume, the number of seed round projects increased from 77 to 81 between the second and third quarters of 2023.

· The prevalence of seed round financing may be due to the abundance of unproven technologies in today's market. Seed rounds typically support ideas without mature products or customers, thus carrying higher investment risks. However, the valuation of seed round projects is usually lower, allowing for risk diversification across multiple projects.

· Although the risk of pre-seed financing is the highest, it is the second largest investment round, which is crucial for research in the cryptocurrency field and the development of minimum viable products (MVPs).

Game, payment, and trading platforms are leading in financing

The top ten financing sectors in the past four quarters are:

Source: Messari, RootData, and Binance Research. Data snapshot as of September 30, 2023.

Please note that a project may involve multiple sectors, and only its main sub-sectors are considered.

· The income sector only has 10 financing transactions, but its average financing amount is the highest. This is mainly because a centralized financial enterprise focused on asset management, Amber Group, has obtained a C-round financing of 300 million US dollars.

· Despite having the highest cumulative funding amount in the gaming industry, the average investment amount is also the smallest, at only $7.42 million.

· This may indicate that investors see opportunities in the gaming industry. However, due to the speculative nature of Web3 games and the potential lack of true gaming enthusiasts, investment amounts remain conservative.

Risk investment still sees opportunities in the gaming industry

Despite the difficult market environment, venture capital firms such as Binance Labs and NGC Ventures remain optimistic and have increased their investment activity. Binance Labs has seen the largest increase in absolute investment value, with a total of 23 investments made in the past two quarters.

Meanwhile, the investment amounts of companies such as Coinbase Ventures and Shima Capital have decreased, which may indicate that these companies have become more stringent in their investment selection. Nevertheless, both remain active investors, with Coinbase Ventures completing 19 transactions and Shima completing 17.

Traditional Venture Capital Enters Web3

The types of financing rounds and leading traditional venture capital firms

Source: RootData and Binance Research. The collected data is from the past four quarters as of September 30, 2023.

· 41.6% of traditional venture capital firms participate in seed round investments.

· Among the top five traditional venture capital companies listed, only Bitkraft focuses mainly on investing in games. HackVC has the highest number of transactions and diversifies its investments across multiple fields, from gaming to infrastructure. Projects include the hybrid derivative trading platform GRVT and the GameFi platform DeGame that utilizes the proof of contribution mechanism.

Traditional venture capital firms remain loyal to the industry

In the past four quarters of financing, the nature of the investors has been involved.

Source: RootData and Binance Research. The collected data is from the past four quarters as of September 30, 2023.

· Despite a downward trend in trading volume over the past four quarters, the proportion of transactions from traditional investors has remained fairly stable, ranging from 40% to 45%.

· Compared with the fourth quarter of 2022, the gap between Web3 investment parties and traditional venture capital firms in terms of transaction volume has significantly narrowed, indicating the latter's strong commitment to the industry.

Traditional Venture Capital Firms' Investment Strategies

The most funded sectors by quarter.

Source: Messari, RootData, and Binance Research. Data snapshot as of September 30, 2023.

Infrastructure-related projects seem to be the most favored by traditional venture capital companies, followed by DeFi and gaming. Interest in NFT projects has declined, with transaction share dropping from 11.4% in Q4 2022 to 4.6% in Q3 2023. However, the attractiveness of tool-related projects has significantly increased, with transaction share skyrocketing from 4% in Q4 2022 to 14.9% in Q3 2023.

Various Section Projects

2023 年各季度排名前五的融资轮

Top five financing rounds in each quarter of 2023

DeFi sector

CeFi sector

NFT sector

The social and entertainment sector

Layer 1/Layer 2 boards.

Infrastructure sector

About Binance Research

Binance Research is the research department of Binance, a top global cryptocurrency exchange. The team is dedicated to providing objective, independent, and comprehensive analysis, with the aim of becoming an authoritative insight platform in the cryptocurrency field. Binance Research analysts regularly publish insightful articles that explore various topics, including the cryptocurrency ecosystem, blockchain technology, and the latest market trends.