The State of Crypto Funds-Part 2
The Crypto Investment Stack
This story introduces The State of Crypto Funds report, a data-driven report on the current crypto fund landscape realized by Crypto Writing Agency. You can find Part 1 there, and the full report on our website.
We’ve analysed how funding from institutional funds has been distributed since March 2017 among:
- 3 categories: Blockchain Platform / Infrastructure / Dapps
- 7 main sub-categories: Blockchain 3.0 / Financial Infrastructure / Technical Infrastructure / Organizational Infrastructure / Information Infrastructure / Data Management / Tech Convergence
- 30 sub-sub categories: From scalability to Identity Management (see image below).
- 250 tokenized networks: Were taken in account projects that had at least 5 funds as investors according to our data.
- 3000 investments: From the 900+ funds we have in our database. We used the data on number of investments and not funded amounts to run the analysis, as it is almost impossible, for the moment, to collect accurate data on amounts invested in each tokenized networks from a given fund.
We agree that working on a given Stack such as this one might have limited the field of the analysis (we’ve not taken into account the 750 other projects that have been funded by funds, and have left aside some sub-categories of Dapps for example). Nevertheless, the concentration of funding from institutional funds is such that it covers 75% of the total number of investments realized by funds, according to our data.
Let’s take a look at the distribution of funding among the 7 sub-categories.
First, we can see that crypto-native funds (funds that are exclusively investing in tokenized networks) tend to proportionally invest more in Blockchain 3.0 platforms than traditional funds investing in tokenized networks. On their side, traditional funds dedicate a higher proportion of their investments on the Information Infrastructure Stack (Content distribution & curation, prediction markets, advertising). Apart from those two differences, their investment distribution is almost similar.
The second part of the analysis concerns the evolution of funding distribution among the 7 sub-categories since March 2017 (taking into account the crowdsale date of funded tokenized networks). We can distinguish 3 phases :
- The Financial Infrastructure Era: From March 2017 to August 2017, with 41% of the total number of investments dedicated to the Financial Infrastructure Stack
- Blockchain 3.0 to compete with Ethereum: From September 2017 to August 2018, with 31% of of the total number of investments dedicated to Blockchain 3.0 platforms
- Layer 2 technologies gain traction: Since September 2018 (note that an important part of the networks have not conducted any crowdsale for the moment), with 35% of the total number of investments dedicated to the Technical Infrastructure Stack
Now, let’s take a closer look at each sub-categorie to see which projects are funded, who are the investors, and how funding is distributed among the sub-sub categories.
Blockchain 3.0 platforms strive to answer today’s blockchain platforms limits and build high-throughput infrastructures with lower confirmation time, lower gas costs, increased interoperability, increased security that are more adaptable to enterprise usage. Since March 2017, 47 blockchain platforms have had at least 5 funds as investors. There has been more than 800 investments realized by institutional funds and the total funding amount, including public sales, excess $7.5bn, while 12 platforms haven’t run a public crowdsale yet. As we can see on the graph, there is an upward trend, with more and more platforms receiving funding from institutional funds. Some of the most active investors in this segment are:
- Hashed: 13 investments including Tomochain, Icon & MultiVAC
- Arrington XRP Capital: 10 investments including Thunder, Fantom & Ultrain
- FBG Capital: 9 investments including Zilliqa, Oasis Labs (Ekiden) & IOST
In the same time, many projects focus on building layer 2 technical solutions aiming at tackling the same limits (scalability, interoperability, network costs, security). Since March 2017, 37 projects have had at least 5 funds as investors. There has been more than 600 investments realized by funds and the total funding amount, including public sales, excess $1bn, while 11 projects haven’t run a public crowdsale yet. And as we can see on the “Evolution of investments since 2017” graph above, these projects are gaining more and more traction. Among them a larger number of these tokens aren’t yet traded and their teams are focusing on building their solutions:
- Decentralized computing networks (Perlin Network, Orchid Protocol, Hadron)
- Off-chain & side-chains protocols (Celer Networks, Polkadot)
- Smart-contracts security verification (Certik)
- Development solutions (ZeppelinOS)
Some of the most active investors in this segment are:
- DHVC (Digital Horizon Capital): 12 investments including Celer Network, Certik & Ankr Network
- Kenetic Capital: 9 investments including Sentinel Protocol, Quantstamp & Origin Protocol
- Fabric Ventures: 5 investments including Polkadot, Orchid Protocol & Zeppelin OS
While Technical infrastructure projects have gained much traction in 2018, Financial Infrastructure projects haven’t had the same exponential growth in funding from institutional funds (see graph “Evolution of investments since 2017”). Since March 2017, 45 projects have had at least 5 funds as investors. There has been more than 600 investments realized by institutional funds and the total funding amount, including public sales, excess $1.2bn, while 8 projects haven’t run a public crowdsale yet.
2018 has marked an important shift, with a larger focus on:
- Stablecoins (Basis, TrustToken, Terra, Celo, Havven, Duo, Fragments)
- Securities tokenization platforms (Harbor, Polymath)
- Lending (Cred, Rate3 Network)
- Decentralized financial architecture (Liquidity: Kyber Network, Dark Pools: Republic Protocol, Derivatives: dY/dX)
Some of the most active investors in this segment are:
- BlockAsset Ventures: 8 investments including KyberNetwork, Republic Protocol, Omisego
- Pantera Capital: 7 investments including 0x protocol, Harbor & Basis
- Polychain Capital: 5 investments including dY/dX, Celo, Terra
The way we create, distribute, curate & reward information & content is part of the infrastructure being built today. The way we govern and collaborate within decentralized networks is also part of this infrastructure. That’s why we have decided to consider theses fields of innovation as part of our Crypto Investment Stack. And institutional funds have too. Since March 2017, 30 projects have had at least 5 funds as investors. There has been more than 300 investments realized by institutional funds and the total funding amount, including public sales, excess $0.4bn, while 6 projects haven’t run a public crowdsale yet. Indeed, very cool projects are being built today:
- Token curated registries (Messari, DIRT Protocol)
- Advertising networks (Basic Attention Token, DATA)
- Governance (Aragon, District0x)
Some of the most active investors in this segment are:
- DHVC (Digital Horizon Capital): 5 investments including DIRT Protocol, DATA, Messari
- JRR Crypto: 4 investments including Merculet, DACC, & ContentBox
- BlockVC: 3 investments including Gifto & DATx
Taking back the control of one’s data & identity is one of the major promises of a blockchain-based internet. Allowing this data to be stored in a distributed way while preserving privacy is also at stake. Since March 2017, 28 projects have had at least 5 funds as investors. There has been more than 400 investments realized by institutional funds and the total funding amount, including public sales, excess $0.7bn, while 5 projects haven’t run a public crowdsale yet. Let’s zoom on current projects:
- Data storage (Bluzelle, Filecoin, Arweave, Holochain)
- Data marketplaces (Dock, Ocean Protocol, Quadrant, Airbloc)
- Data communication (Mainframe, Skrumble Network)
- Identity Management (Civic, Metadium, Sovrin)
- Privacy layers (Keep Network, Nu-cypher, Enigma)
Some of the most active investors in this segment are:
- Arrington XRP Capital: 7 investments including NuCypher, Carry Protocol & Metadium
- Pantera Capital: 6 investments including Civic, Filecoin & Enigma
- 1kx: 5 investments including Mainframe, DOCK & Arweave
We’ve reunited those two stacks for design purposes and because they had similarities regarding funding evolution. But let’s treat them separately.
Tech convergence:
We used the expression “Tech Convergence” to describe the use of Blockchain technology to foster innovation in Artificial Intelligence & IOT. It includes the development of Big Data, Machine Learning & IOT networks powered by Blockchain, decentralized AI marketplaces, AI autonomous systems etc.
Since March 2017, 11 projects have had at least 5 funds as investors. There has been 180 investments realized by institutional funds and the total funding amount, including public sales, reaches $0.2bn, while 3 projects haven’t run a public crowdsale yet. Major projects worth mentioning:
- Artificial Intelligence (DxChain, Cortex, SingularityNET)
- IOT (Blockcloud, IoTeX, IOT Chain)
Some of the most active investors in this segment are:
- GBIC (Global Blockchain Innovative Capital): 5 investments including IoT Chain, IoTeX & Cortex
- Node Capital: 4 investments including Blockcloud, DxChain & MXC
- 42 Fund: 3 investments including SingularityNET & Endor
Decentralized applications:
Since March 2017, decentralized applications have received few fundings from institutional funds, who currently focus on building the Infrastructure allowing tomorrow’s Dapps to run efficiently. Most of the investments in Dapps by institutional funds were directed towards the Gaming industry, with a focus on non-fungible tokens innovations such as Decentraland (Non-fungible VR collectibles) and WAX (marketplace for non-fungible items).
At Crypto Writing Agency, we believe that this analysis shows that the space is currently focusing on funding and building the Infrastructure levels of tomorrow’s Blockchain revolution. And that’s pretty good news.
Who are we?
Crypto Writing Agency, is a crypto agency specialized in market studies, industry reports and in-depth analyses of the cryptocurrency market. Our first product, cryptofundslist.io, is the largest and most comprehensive crypto funds database, with over 900 funds and 4500 investments listed. It allows you to track, understand and analyse crypto funds activity and investments. Visit our website for more info on our product and feel free to reach out to us at florent@cryptofundslist.io if you have any question or comment about our report or product.
