Written by RootData Research
Summary
Web3 industry financing maintained strong momentum in Q2 2024, with a total of US$2.75 billion, a year-on-year increase of 38.9%. The social track has emerged as a new force, with total financing soaring 650% month-on-month. The total net inflow of Bitcoin spot ETFs in Q2 reached US$2.394 billion, a month-on-month decrease of 80%, and the total amount of asset management decreased by 12.4% month-on-month.
The total number of mid- and late-stage financings in Q2 2024 increased by 20.7% month-on-month. This trend may reflect that as the market stabilizes, investment institutions are more inclined to make strategic large investments in advance. Animoca Brands became the most active institution in Q2 with 36 investments. The top ten institutions' investment in the GameFi track increased by 71% month-on-month.
Paradigm announced the completion of $850 million in fundraising, becoming the largest fund raising event in Q2 and even the first half of 2024. In the bull market that began at the end of 2023, the total amount of funds raised by Web3 funds was more than 10 times lower than the previous bull market, and the BTC price was no longer driven by the inflow of Web3 funds.
When high FDV and low circulation projects are about to hold TGE, the search volume reaches a peak, but then drops off a cliff. Competition for Binance List Tokens is fierce: the average valuation of Launchpool projects is $217 million, and the institutional investment rate is less than 2%. It is expected that more than 30 large projects will hold TGE in Q3.
1. The total financing amount in Q2 2024 reached US$2.75 billion, a year-on-year increase of 38.9%; the total financing amount of the social track surged by 650% month-on-month
Bitcoin price trend and total financing of Web3 industry in Q2 2024 Source: RootData
Bitcoin price experienced significant volatility in Q2 2024. Bitcoin prices reached a quarterly high of $71,630 on April 8 before falling to a quarterly low of around $58,300 on May 1. As of June 30, Bitcoin prices were down about 13% from the start of the quarter. Total net inflows into Bitcoin spot ETFs in Q2 reached $2.394 billion, down 80% from Q1. As of June 30, the asset management scale was US$51.127 billion, a decrease of approximately 12.4% from Q1. In this complex market environment, the popularity of Web3 primary market financing continues to grow. According to RootData statistics, a total of 418 financing events occurred in the Web3 primary market in Q2 2024, with a total financing amount of US$2.75 billion, a year-on-year increase of 38.9%.
Top 3 tracks by investment and financing amount in Q2 2024 Source: RootData
According to RootData statistics, the top three tracks in terms of financing amount in Q2 were infrastructure, DeFi and social. The total financing amount of the infrastructure track reached US$1.016 billion, a month-on-month increase of 145%. It is worth noting that the social track has emerged with a total financing amount of US$227 million, a surge of 650% month-on-month and a year-on-year increase of 261%.
The strong performance of the infrastructure track is related to the large financing of multiple Layer1 and Layer2 projects, such as Monad's $225 million and Berachain's $100 million. In the DeFi track, there are 56 projects with million-dollar financing, mainly in the seed round, indicating that new projects are emerging in large numbers. The biggest reason for the explosive growth of the social track may be that projects represented by Farcaster have successfully balanced technological innovation and user experience, while cultivating a high-quality, low-noise community culture. This innovative model may solve the sustainability issues of early SocialFi projects and provide new possibilities for attracting a wider user base, thereby promoting the rapid development of the entire track and a large influx of investment.
2. The total number of mid- and late-stage financings in Q2 increased by 20.7% QoQ, and the total financing amount of the top 5 companies increased by 81.25% QoQ.
Distribution of project financing amounts in Q2 2024 Source: RootData
In terms of the financing amount range, the number of early-stage investment projects (less than $5M) in Q2 was 160, a slight decrease from the previous quarter; the number of mid-term investment projects ($5M-$10M) was 79, a year-on-year increase of 61.2%. The total number of mid- and late-stage financings reached 146, a month-on-month increase of 20.7%. This trend may reflect that as the market stabilizes and may be preparing for the expected next round of market increases, investment institutions may prefer investment opportunities that can be exited in the short term.
The top five projects in terms of financing amount in Q2 2024 received a total of US$725 million in financing, an increase of 81.25% compared to Q1. Among them, Monad completed a financing amount of US$225 million led by Paradigm and ranked first. It is worth noting that Farcaster completed a financing of US$150 million with a valuation of US$1 billion. Previously, the overall financing status of this track has been relatively sluggish. The total financing amount of projects that disclosed financing amounts in Q1 was only about US$70 million. In addition, Berachain’s valuation has reached US$1.5 billion in the B round of financing in April 2024. Its valuation has increased by 257% in one year.
Top 5 funding amounts in Q2 2024 Source: RootData
3. The total investment volume of the top ten institutions in Q2 increased by 2% month-on-month. Animoca Brands invested 36 times and became the most active investment institution in Q2.
2024 Q2 Institutional Activity Ranking Source: RootData
According to RootData data, the top ten investment institutions with the most investments in Q2 2024 participated in a total of 202 investments, an increase of about 2% month-on-month. OKX Ventures ranked first in Q1 with 30 investments. Although it dropped to 25 in Q2, it remained active. Infrastructure is still the most popular track, with the top ten institutions investing 81 times in this track, accounting for about 40% of their total investments in Q2.
The top ten investment institutions invested 53 times in GameFi in Q2, a 71% increase from Q1. This explosive growth may be due to the fact that projects in this track are shifting from a simple "play and earn" model to a more complex and attractive gaming experience. This shift not only improves game quality and user experience, but more importantly, maintains the sustainability of the economic model. In contrast, the lack of innovation in the DAO and NFT tracks continued the sluggish state of Q1.
View real-time data on institutional on-chain holdings: OKX Ventures; HashKey Capital; The Spartan Group
4. Web3 investment funds raised $1.38 billion in the first half of the year. Investors tend to be cautious and compliant. Bitcoin maintains independent growth
Web3 venture capital fund fundraising quantity and amount (2015-2024Q2) Source: RootData
Public data since 2015 shows that there have been 177 fund raising events in the Web3 field, with a total fundraising amount of more than US$39.6 billion. Large-scale external capital has driven the bull market from 2021 to 2022, and has left behind a large number of highly valued projects, such as StarkNet and zkSync.
Although the pace of capital inflow has slowed down in the past two years, it is still much higher than in 2020 overall and shows an upward trend. In the first half of 2024, the Web3 Fund has completed fundraising of US$1.38 billion, of which Paradigm announced on June 13 that it had completed fundraising of US$850 million, becoming the largest fund-raising event in Q2 and even the first half of 2024.
In the bull market that started at the end of 2023, the total amount of funds raised by Web3 funds was more than 10 times lower than the previous bull market, and the price of Bitcoin was no longer driven by the inflow of Web3 funds. This may be because traditional high-net-worth users are more cautious and invest in Web3 currencies through compliant channels such as ETFs, and are worried about becoming the receivers of the exit wave of the previous bull market, which has driven the rise of Bitcoin alone.
5. Review of Q2 Hot Search Projects
5.1 The airdrop season is coming as scheduled, and the high valuation and low circulation model may suppress the performance of the currency price
RootData Q2 Hot Search Token List (Top12) Source: RootData
In Q2, Bitcoin fluctuated within a wide range between $57,000 and $72,000. Many star projects chose to conduct TGE during this window period, such as Wormhole, io.net, zkSync, Layerzero, Blast, etc. Among the 12 most searched projects that have undergone TGE in Q2, it was found that the search volume reached a peak when the project was about to undergo TGE, and then dropped off a cliff. At the same time, the attention value is significantly affected by the price of Bitcoin and is closely related to Web3 market confidence.
Many high-profile projects have the halo of "high valuation and low circulation". RootData's previous research pointed out that the average valuation of Binance Launchpool projects in the past three years was US$217 million, and the average valuation of OKX Jumpstart projects was US$373 million. In addition, among projects with FDV within US$1 billion and not listed on Binance, only more than 30% of the projects did not have an inverted primary and secondary valuation.
In 2021-2022, a large amount of capital poured into the primary market, adopted aggressive valuation strategies, and was in an optimistic market sentiment. Many Web3 funds blindly chose high-valuation investment strategies. However, these projects failed to demonstrate a sustainable business model. At the same time, the shrinking liquidity caused by the US dollar interest rate hike also had an impact on the Web3 market, which may be one of the external reasons why investors are reluctant to purchase new tokens.
5.2 Binance List Token competition is fierce, and it is expected that more than 30 large projects will conduct TGE in Q3
Q3 may see TGE’s high FDV, large financing projects Source: RootData
The Q3 TGE project list released by RootData includes 30 star projects with large financing and high FDV, such as Monad, Fuel, Scroll, Succinct, etc., all of which have a high probability of being listed on Binance.
According to statistics on the investment portfolios of 288 investors, it was found that on average, the number of Binance Launchpool projects accounted for no more than 2% of their investment portfolios. Among the nearly 30 Binance Launchpool projects, 21 were invested by Binance Labs, accounting for more than 11% of its investment portfolio.
Due to Binance's trading depth and slippage advantages, as well as the competitiveness of its contract rates, Binance's highly competitive coin listing environment has a profound impact on the market. Project parties who choose to conduct TGE on Binance can effectively utilize its market advantages and platform resources, laying a good market foundation for the long-term development of the project.
5.3 The core brands in the Web3 field are distributed in the fields of exchanges, underlying public chains, Web3 media and analytical tools
X Impact Index Source: RootData
The X-Influence Index launched by RootData conveniently shows users the most influential Web3 projects, of which the core 12 projects are distributed in 4 key areas:
Exchanges: Coinbase, Binance, Uniswap
Underlying public chains: Bitcoin, Ethereum, Solana, Polygon
Web3 Media: CoinDesk, The Block, Cointelegraph
Analysis tools: CoinMarketCap, Messari
5.4 X Hot Surge List is easier to find Alpha projects and is highly correlated with investor sentiment
As a market dynamics observation tool, the X Hot List has quickly attracted many potential Alpha projects due to its close linkage with X platform data, and is updated frequently. At the same time, the list has become an important window for investors to understand market sentiment, and the heat value has shown an overall downward trend in Q2:
April: Web3 market sentiment is optimistic and projects are highly active
May: Market volatility, investors cautious
June: BTC rebounded but failed to break the previous high, market liquidity declined, and social media popularity dropped to freezing point
