VCs poured investments into DeFi despite US crackdown
Despite the context of regulatory uncertainty, the United States’ ongoing assault on crypto, and a bear market, venture capital companies have invested billions of dollars into the industry this year.
During downturn markets, venture capital investment tends to slow down, but this year has already seen several significant investments in crypto and web3. It would seem that investors have not been put off by the fact that there is a background of regulatory uncertainty and an explicit assault on the industry in the United States.
On April 18, the Twitter account DeFi Investor discussed many of the most significant funding drives that have taken place in the crypto and Web3 industries thus far in 2023.
Several of the industry’s most prominent venture capital companies, including Three Arrows Capital and Alameda Research, have gone out of business recently. On the other hand, “crisis means opportunity,” as the expert pointed out.
This year, a16z and Sequoia Capital, amongst other investors, contributed to raising 120 million dollars for LayerZero. The protocol makes creating cross-chain decentralized applications (dApps) compatible with all the main blockchains easier. After raising $135 million in Series A funding in March of 2022, it has been estimated to be worth over $3 billion.
Scroll ZKP received investment from investors, including Polychain Capital and Sequoia, for $50 million at a value of $1.8 billion. The project makes it possible to construct smart contracts using the Ethereum Virtual Machine (EVM).
In a separate funding round headed by Blockchain Capital, the Ethereum restaking platform Eigenlayer received $50 million. The protocol allows ETH to be restaked into other networks, improving the networks’ crypto-economics and security.
Artificial intelligence-focused crypto protocol DWF Labs, a market maker and investment business, contributed $40 million to Fetch.ai’s funding round. The platform seeks to use artificial intelligence to automate various processes, including processing transactions.
Other crypto and web3 initiatives, like the social network Plai Labs, which got $32 million, and optimized trading platform Sei Network, which garnered $30 million, are examples of businesses that have received venture capital financing this year.
DeFi fleeing into Asia amid US crackdown
In addition to the impressive DeFi investments, businesses active in the cryptocurrency industry are becoming more skeptical of the United States and instead focusing on Asia.
Several major funds with budgets in the millions of dollars have been explicitly established to invest in Asian web3 and cryptocurrency firms. Among them is the one hundred million dollar Bitget Web3 Fund introduced earlier this month.
According to Bitget, the fund’s objective focusing on Asia is to “foster a positive attitude towards the digital currencies economy and support the development of the web3 environment.”
At the end of March, the Hong Kong investment group ProDigital Futures announced intentions to invest $100 million in cryptocurrency and Web3 firms in the area.
When Hong Kong introduces its crypto regulatory framework in June, the city may become a center for venture capital investment. Through this legitimate channel, significant sums of money originating from mainland China are getting ready to join the industry.