After the public chain wars launched by Alameda, Zhusu, Hashed and DCG, despite the increasingly negative market sentiment, cryptocurrency VCs continue to aggressively expand in different areas, where is the money going?
A glimpse into the investment trends of crypto VCs in the first quarter: where did they put their money?
1. In Q1 22, crypto VC firms invested $14 billion, equivalent to 50% of total invested capital in 2021.
2. The exchange mainly invests in cross-chain projects and NFTFi
3. Top venture capital firms favor options and ZK
4. It is undeniable that exchanges and leading VCs have a strong interest in DAOs and games
VCs in the cryptocurrency space are mainly divided into two types, the venture capital department of the exchange and the (top) venture capital firm, with different types and different natural strategies.
Let’s start by looking at the strategies executed by the VC arm of the exchange.
Among them, 5 of the 31 DeFi projects are cross-chain projects (16%), and 6 of the 16 NFT projects are NFT financialization projects. (38%)
At present, the most concerned cross-chain bridges are:
LayerZero_Labs ($STG), MultichainOrg ($MULTI), SwimProtocol ($SWIM), 和 Routerprotocol ($ROUTE), Symbiosis_fi ($SIS)
With the exception of $SIS, all of them have raised a bewildering amount of funds from different VCs, especially $STG’s VC investors.
VCs are not just smart money, they are narrative creators. During 2021-2022, SBF, Zhusu, Simon Seojoon Kim and BarrySilbert chose $SOL, $AVAX, $LUNA, and $NEAR respectively, followed by the public chain war. In 2022, although cross-chain bridges are often hacked, cross-chain is still the hottest topic for VCs.
Price Discovery for NFTs
This should be a topic of financialization of NFTs, real-time price discovery is irrelevant when we only trade NFTs themselves, however, if NFTs are combined with DeFi, it is important.
Imagine a BAYC mortgage. Suppose the actual price of BAYC is 100 ETH, and BAYC is traded every hour.
If BAYC is sold for 1 ETH by a malicious attacker, and many BAYC holders are collateralizing their BAYC, a large amount of funds may be liquidated, which is why price discovery is important.
Let’s take another look at where the top VCs are investing.
Among them, 4 of the 34 DeFi projects are options projects (12%), and 8 of the 40 infrastructure projects invested in are privacy and extension projects (20%).
Why are options important? Because this is an active benefit in DeFi and the derivatives market is larger compared to the spot market in TradFi.
Normal DeFi protocols provide yields using their own governance tokens, which are minted by the protocol. However, the benefits offered by option agreements are generated by organic mechanisms, so they are much more sustainable.
In the stock market, daily options volume in 2021 ($450 million) exceeds daily spot volume ($405 million). Among cryptocurrencies, Binance’s daily derivatives trading volume ($56 billion) exceeds daily spot trading volume ($18 billion). The on-chain options market is one of the most underserved markets in cryptocurrencies.
Zero Knowledge Proof (ZK)
Almost all infrastructure projects are trying to make blockchain more private and scalable, for this, ZK is necessary, the zkEVM solution is coming, it is a phenomenal technological breakthrough that naturally gains the head Favored by VCs.
Whether it is the venture capital department of an exchange or a top venture capital firm, they all pay attention to DAOs and games.
DAO governance tool: Nftychat (Discord required to log in with Fox Wallet) + ENS = the most intuitive DAO governance tool. For a real DAO, we need a Web3-native social platform.
Gaming: One of MaviaGame’s most talked about gaming projects, it has raised $8 million from places like Alameda, Binance Labs, and Mechanism capital, and has successfully completed a land sale.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/where-did-crypto-vcs-invest-their-money-in-the-first-quarter/
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