Coinbase Ventures also summarized the key themes of the third quarter, including in-depth supervision, multi-chain trends, and the rise of NFTs.
Coinbase Ventures has grown into one of the most active VC investors in the crypto space. In the third quarter, Coinbase Ventures has made a record 49 investments, with an average of one new transaction every 1.8 days. This is an increase from 28 investments in the second quarter and 24 investments in the first quarter. As of the third quarter of 2021, the Coinbase Ventures portfolio includes more than 200 companies and projects.
Cumulatively, 90% of Coinbase Ventures’ investment funds have been put into use since the beginning of 2021, reflecting the accelerated pace of Coinbase Ventures in its fourth year of operation. 50% of the unique new “Logo” in its portfolio will also appear in 2021.
Motivation and philosophy
The main task of Coinbase Ventures is to support the growing crypto ecosystem, so it invests extensively in powerful entrepreneurs who promote the development of cryptocurrencies. Coinbase Ventures hopes that the crypto ecosystem will flourish and not just focus on specific results (this is a typical corporate venture capital).
In the end, Coinbase Ventures regarded cryptocurrency as a rising wave, and the development of the ecosystem promoted the “rising tide” of all participants, including Coinbase. Traditional strategic interests (such as business partnerships and potential mergers and acquisitions) are good, but Coinbase Ventures believes they are icing on the cake.
Coinbase Ventures’ investments range from six-figure seed round transactions to multi-million dollar growth rounds. There are many ways to divide investment categories, but Coinbase Ventures subdivides the market into the following categories: protocol + Web3 infrastructure, DeFi, CeFi, platform + development tools, NFT/Metaverse and others.
Specifically, among the six investment categories of Coinbase Ventures, protocol + Web3 infrastructure (29%) accounted for the largest proportion, and the other categories were DeFi (24%), CeFi (18%), platform + development tools (15%), NFT + meta universe (9%) and others (5%).
Key themes and experience
In its most active quarter to date, Coinbase Ventures has seen major developments in US CeFi, Layer 1/Layer 2 (L1/L2), cross-chain protocols, and Web3 tools. Here are some of the main themes observed by Coinbase Ventures:
Regulators and centralized participants deep into the cryptocurrency field
Regulators became more well-known in the third quarter, as the U.S. Securities and Exchange Commission (SEC) and the Department of the Treasury and the International Financial Action Task Force (FATF) all increased their participation in the entire crypto ecosystem. This creates some form of regulatory risk for early agreements and teams. On the other hand, BTC, the largest market capitalization crypto asset, received active support, and the BTC Futures Exchange Traded Fund (ETF) was approved by the SEC. Coinbase Ventures believes that this will allow potential capital to enter the crypto market, resulting in a large amount of transaction volume, capital inflows and interest.
Web 2.0 companies such as Square, Twitter, Stripe, and Tik Tok also expanded their encryption strategies in the third quarter. Square announced a Bitcoin-based financial services platform, Twitter revealed that it will integrate the BTC Lightning Network and NFT in the future, and Stripe announced that it will return to the encryption field through its dedicated new encryption team. Tik Tok announced a collaboration with ImmutableX to launch NFT collections led by creators.
At the same time, with the support of Coinbase Prime, Coinbase Cloud and other third-party platforms, banks, fintech companies, and broker-dealers began to further integrate cryptocurrencies into their products. In short, in the past quarter, the crypto industry has made tremendous progress in maturity and institutional adoption.
Multi-chain ecosystem is developing rapidly
After years of developing solutions aimed at alleviating the bottleneck of Ethereum, with the emergence of a series of layer 1 and layer 2 ecosystems, the expansion has finally been realized. The current main motivation lies in the use of EVM (Ethereum Virtual Machine) compatible solutions that allow users and developers to migrate to the new environment with relatively low switching costs. Users can use their existing wallets to access EVM-compatible L1, such as Avalanche; or sidechain/L2, such as Polygon, Arbitrum, Optimism. Solidity smart contracts can usually be copied and pasted to any EVM-compatible L1/L2, which facilitates the deployment of popular DeFi applications across multiple chains.
Due to the slow integration of CeFi Exchange with these new L1/L2, Coinbase Ventures saw the appeal of the newly launched cross-chain bridge. These cross-chain bridges have facilitated the transfer of billions of funds from Ethereum to various L1/L2.
Although EVM-compatible applications written in Solidity in the third quarter are the most attractive on L1 and L2, other ecosystems are bringing more expressive programmability to desktop programs. New primitives (Primitives) focus on more familiar programming languages, such as Rust (Solana, Polkadot), Golang (Cosmos) and Move (Facebook Diem, Flow), which may bring a new wave of Web 2.0 to the industry Developer.
Better Web3 UX is coming soon
In the third quarter, Coinbase Ventures saw further development of Web3 tools that will simplify the Web3 interactive experience. XMTP is leading the messaging standard across Web3 addresses. Spruce is standardizing “OAuth” (Open Authorization), which will allow users to securely share digital credentials, private files, and sensitive media content with Web 3 applications. Snapshot makes it easy to access governance forums and decision-making across DApps.
At the same time, a lot of work is being done to create additional security for Web3 applications. OpenZeppelin’s decentralized project Forta is making progress in real-time security monitoring of smart contracts. The goal is to provide more transparency in smart contract code execution, error detection, and ultimately real-time prevention of hacker attacks. Similarly, Certik is providing a “quick and easy” automated audit tool to help DApp launch in the market faster.
At the same time, as the technology and bill creation model of the on-chain community began to work, the DAO technology stack continued to evolve. Syndicate (and other projects) aims to become an “encrypted AngelList” by creating a decentralized investment protocol and social network.
NFT 2.0 and crypto games are booming
The third quarter also saw a lot of development focused on NFT creator tools, which will eventually expand the scope of NFT use cases and audiences, while creating new social features.
At the same time, under the leadership of Axie Infinity, the development of NFT-based games continues to accelerate, as its Play-to-Earn model is very popular in emerging markets (Philippines, Brazil, India, etc.), attracting 2 million DAU (daily active users) and generate more than 200,000 U.S. dollars in revenue. The Loot Project also attracted the entire industry through a reverse game development model. This is done by first releasing NFT-based game assets to the public to guide the community and encourage further development.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/coinbase-ventures-is-optimistic-about-these-areas-what-do-you-think/
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