Hyperthreading Web3 Adoption in 2021
Let’s take a stab at wrapping up 2021, as Fabric Ventures continues its mission to help founders weave the fabric of the Open Economy.
At Fabric Ventures, we believe that Web3 is inevitable; empowering the Open Economy, intertwining human-centric services into everyday lives with unprecedented intimacy — all whilst providing trust to our machine counterparts to not abuse the growing torrents of data generated.
2021 has been a monumental year for the Web3 community: The pandemic; decreasing trust in traditional institutions; ever expanding applications; and a desire — as our identities become increasingly virtual — for true digital ownership, has driven rapid adoption & growth.
The (r)evolution has begun…
Where will this Web3 movement take us? In order to foresee the future, we must first reflect on the past. So, as time adds another notch to its ledger, let’s reminisce about some of our highlights from 2021 and why we’re excited for 2022.
NFTs and the Metaverse
There was a time when owning NFTs was a status symbol reserved only for the degens and apes; that is until Sotheby, a blue-chip art auction house, launched its NFT-exclusive marketplace — the Metaverse.
Decentraland, an investment made from our 2017 fund, held virtual gatherings to the extent so far unseen, bringing a new meaning to online community and exhibiting what the Metaverse is capable of, fuelled by the power of NFTs; and with Nike acquiring RTFKT Studios, a NFT sneakers & collectible company, Vogue announcing the Metaverse’s First Runway Show, and a Virtual Fashion Week, The Metaverse even aped into fashion!
Speaking of which, let’s talk about these Bored Ape Yacht Club NFTs.
BAYC has recorded $542M in lifetime sales; if you think this is just a JPEG, you’re NGMI. BAYC has bridged into real life membership too, organising the APE FEST 2021 for NFT-holders — it even cross-overed with NFT.NYC.
But 2021 showed us that NFT ownership is far more than just JPEGs of Punks & Apes. In Oct, following on from our earlier position, we invested in Sky Mavis’ $152M Series B round, seeing that Axie Infinity’s Play-to-Earn (P2E) model — coupled with Guilds — can become an entirely new iteration in the future of work. A model where fair and equal revenue streams can be achieved, simply by being an active user in the ecosystem. It might start with a game, but a future, with large coordination of guilds and P2E models, leading to a democratisation of work in the digital realm, through game economies and beyond, is within sight.
We also joined a $25M investment in Concept Art House’s Crypto Art House division. Concept Art House is a renowned game art studio that has serviced just about every well known game developer active today, with outstanding quality of delivery… think Activision-Blizzard, EA, King, Epic Games, Bethesda, Zynga etc…
This investment has great synergy with our existing NFT portfolio ecosystem: Sorare, Axie Infinity, Immutable X, as well as our ecosystem partner Flow, from Dapper Labs. To top this off, we invested in Immutable’s $82M Series B round, precisely because Immutable will empower an even larger NFT market, with its ZK-powered Layer 2 solution for NFTs.
The true Metaverse is emerging.
We were particularly excited by the prospects that Decentralised Finance offers to its users, and 2021 pushed possibilities to higher heights than ever before.
We backed 6 projects in DeFi this year:
- Blockpit’s $10M round to build out infrastructure for crypto tax and compliance.
- Superfluid’s $9M round to turn programmable cash flow into defi developer lego.
- Angle Labs $5m seed with a16z, Wintermute, Global Founders Capital among others: “Farewell USDC, Hello agEUR”.
- Unstoppable Finance’s investment to onboard the next billion users to crypto.
- Strips Finance, a DEX to trade interest rate swaps.
- Voltz, an AMM to trade interest rate swaps.
One Chain to Rule Them All?
Crypto Twitter is always buzzing with news, “shittweets” and various debates. One of the most prevalent is that between which ecosystems, protocols & projects are here for the long haul. While Ethereum (and EVM as a standard) is probably the OG, its gas fees are still exorbitantly high for the average user. This sparked off a thorough debate between alternative L1-supporters (Near, Solana, avax, Fantom etc..) and ETH-L2 supporters.
Roll up the carpet: L2 is here
2021 is the year when we rolled out the carpet and welcomed greater Layer 2 adoption on EVMs:
- Optimistic rollup on Optimism: $275M+ saved gas fees.
- Generalist L2 solution on Polygon: $15B+ market cap.
- ZK-rollup on Starkware: 75M transactions.
- Layer 2 support on Uniswap.
The Great Migration
Globally we had The Great Resignation, powered by the pandemic. Now The Great Migration looks primed & ready to go, powered by Web3. New York Times reported a record number of tech executives leaving their Web2 employers to board the Web3 rocketship. To name but a few:
- Brian Roberts resigned from Lyft as CFO to join Opensea.
- Jack Dorsey renamed Square to Block, after he resigned from Twitter: Web3 integration imminent?
- David Marcus, former head of crypto at Meta (Facebook), is planning to leave at the end of the year.
Despite the influx of Web2 talents into Web3, there is still massive demand for strong technical talents. So, we piloted our refreshed Fabric X program in partnership with FRST to deliver Le Crypto Fellowship, providing 10 of the most daring entrepreneurs with €100k, to live, learn and experiment for a year.
Then we followed up with the soft launch of Fabric X; committing €20 million, together with our ecosystem partners, for the infrastructure required to support the next generation of Open Web Founders. Watch this space!
In July, we announced Fund 2021, with $130M to back the Open Economy — backed by the European Investment Fund, Atomico, Galaxy Digital and DCG, plus founders of Ethereum, Wise, and MySQL.
Our new fund is already refining the thesis of our 2017 vintage, whose portfolio of projects encompasses open web, open finance and open media; including Polkadot, TheGraph, Sorare, 1Inch, SkyMavis & Near; and has a combined value north of $42bn, over a 20x multiple on the capital invested.
Looking ahead to 2022
Open Economy X Gaming
In Dec, we invested in our very own BlackPool’s $6M round. It’s a DAO we co-created with Stake Capital that operates in multiple games, deploying human & financial capital via vertical managers and a growing guild of players spread across the world, BlackPool has grown into one of the two largest gaming guilds by NFT AUM, with now $22.5m in NFT assets split across Sorare, Axie Infinity, Cometh, Guild of Guardians, OVR, Aavegotchi, and more.
Even with how far gaming has pushed technological boundaries, there is plenty of innovation still to occur. Ian Emerson, from our investment team, published a thought-provoking piece for you to check out: What would the Steam of Web3 look like?
RSS3 for Web3 feed and content distribution
We are also excited to invest in RSS3, a protocol building a decentralized web feed for content distribution across blockchains:
The Open Economy is a push update to Capitalism 2.0
Today’s omnipresent digital platforms are closed economies, optimised to trap data and power centrally in the pursuit of profitability. Over time, these platforms have ceased to innovate for their users or to protect their well-being and privacy.
By contrast, the new technologies of the open web, such as digital assets, blockchains, NFTs and the Metaverse support the free flow of users, identity, data, and value, incentivising collaboration and facilitating an open economy; with more benign outcomes, greater overall economic returns for all participants, and ultimately a fairer, more stable and sustainable society. Fabric Ventures sees this as an upgrade to capitalism itself.
We back the boldest technologists & communities at the earliest stages, supporting them throughout their journey and becoming active participants within the networks they are building.
Here’s to contributing to yet more innovation and collaboration in 2022.
Richard, Max, Anil and the entire Fabric team.