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

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.

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.

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.

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.

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.