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Crypto projects bag over $30 bn in funding despite market slump

Crypto projects bag over $30 bn in funding despite market slump
Photo Credit: Pixabay
5 Aug, 2022
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Despite the ongoing bear market, cryptocurrency projects raised $30.3 billion in funding during the first half (H1) of 2022, according to a recent Crypto Fundraising report by Messari and Dove Metrics, which also said that a total of 1,199 rounds of funding took place across various projects.

While the highest number of fundraisers was in the non-fungible token (NFT) and Web 3.0 sectors, the centralised finance (CeFi) industry attracted most of the funding, the report said, as over 33% of the total funds raised by crypto projects went to the CeFi sector. Out of the total $30.3 billion, it attracted $10.2 billion in funding, it added.

In CeFi system individuals can obtain loans and earn interest through their cypto assets from centralised cryptocurrency exchanges like Binance, Coinbase, Libra etc.

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The report further said that funding for the sector jumped 108% compared to H1 of 2021. Meanwhile, it fell 5.6% when compared to the second half of last year. However, CeFi deals still rose by 40% compared to the second half (H2) of 2021.

In the past year, CeFi deals have been up by nearly 150%. The sector closed Q2 of 2021 with $2.2 billion in funds raised. Meanwhile, in Q2 2022, the sector scooped in $5.6 billion, Messari's senior Cryptocurrency Research Analyst Tom Dunleavy, tweeted.

Moreover, the report reveals that around 50% of the funding deals in the sector was above $10 million. Funding activities of CeFi payment companies grew, bagging around $600 million in May alone. With total funding of $1.5 billion across 41 deals, payment companies attracted the second-highest funds in the CeFi sector. They were outpaced by only cryptocurrency exchanges, which attracted $3.2 billion through 65 deals.

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According to the report, infrastructural investments trailed closely behind the CeFi projects, with the sector attracting over $9.7 billion, or 32% of the total funds raised.

Meanwhile, Ethereum lost its value in NFT sector funding, even though the ETH ecosystem still attracted 64% of the volume. But non-Ethereum chains scooped in $3.5 billion from investors. In contrast, projects in the ETH ecosystem managed to get only $2.8 billion, which is $1.8 billion less than the others, according to the report.

Funding for the total NFT sector increased 365% compared to H1 of 2021. Deals also showed a jump of 168% vs. H1 of last year. Also, the gaming sector attracted most of the NFT funding, to the tune of $4.1 billion through 199 deals. In contrast, marketplaces got $937 million from investors through 49 deals, the Messari report said.

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At the same time, the Web3.0 fundraising activity jumped 764% vs. H1 of 2021. Deals in the sector also spiked 192% when comparing H1 of 2021 to H1 of 2022. Of the total Web3 funding deals, 27% were above $10 million, while only 13% were less than $1 million. In what comes as a sign of Web3 starting to mature, Series A funding makes up 32% of total fundraisers, said Dunleavy.

Meanwhile, decentralised finance (DeFi) was only able to bag $1.8 billion from investors. While this is still 133% in funding versus H1 of 2021, it has failed to register a high number of deals. 

The report further indicated Decentralised Autonomous Organisations (DAO) participation continues to concentrate in early-stage rounds. As per the report, of all funding rounds that included DAO participation, 71% were at the seed stage.

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While the overall market is down, the crypto fundraising report indicates that the falling token prices have not pulled the breaks on investors’ faith in blockchain technology.