Author: RootData Research
Summary
- The total number of financing events in Q3 2024 reached 321 rounds, a decrease of 25.69% quarter-on-quarter, and the total financing amount was $2.406 billion, a decrease of 15.04% quarter-on-quarter. The infrastructure track continued to lead, with a total financing amount of $745 million, accounting for 30.9%.The Bitcoin price experienced wide fluctuations in Q3, rising 0.8% from the beginning of the quarter.
- The number of medium-sized ($5M-$10M) financing projects decreased by 30.4% quarter-on-quarter, and the number of large-scale (greater than $10M) financing projects decreased by 35.8% quarter-on-quarter.Iris Energy became the largest single financing project in Q3 with $413 million in financing.Robot Ventures made 22 investments, becoming the most active institution in Q3.The most popular project label for the active institutions that invested more than 10 times was the infrastructure track (39.2%).
- Tier1 funds are considering OTC as an investment theme, and the number of projects in the Solana, Bitcoin, Ton, and Base ecosystems is growing relatively rapidly. With the start of the interest rate cut cycle, the leading position of the Ethereum ecosystem in the DeFi track will continue to benefit.
- Data analysis tools, creator economy, and prediction markets have become new emerging hot labels, and the crypto market is more inclined towards product-market fit (PMF). The infrastructure track is still the primary choice of capital for blockchain, high concurrency, and parallel EVM may become one of the main narratives of the next cycle of public chains.
- Projects such as Monad and EigenLayer, which have raised large amounts of funding ($50M+) and have been backed by top institutions/exchanges, are about to be unlocked, mainly involving L1/L2 infrastructure, LRT, and derivative DeFi. However, due to the lack of liquidity and severe selling pressure in the first half of the year, projects/investors are adjusting their strategies, seeking cash flow and high liquidity to adapt to the declining returns and stringent valuation analysis.
The total financing amount in Q3 was $2.406 billion, a decrease of 15.04% quarter-on-quarter; the total financing amount of the infrastructure track reached $745 million
In Q3 2024, the Bitcoin price showed a wide range of fluctuations, rising slightly by 0.8% from the beginning of the quarter. The Web3 primary market financing activities remained active, but showed a downward trend month by month. In Q3 2024, the Web3 primary market generated 321 financing events, a decrease of 25.69% quarter-on-quarter. The total financing amount in Q3 reached $2.406 billion, a decrease of 15.04% quarter-on-quarter.
The average financing amount increased slightly, indicating that institutions are more inclined to focus on investing in high-quality projects. The median financing amount decreased slightly from $4.175 million to $4.15 million, indicating that although the amount of funding has decreased, institutions are still actively participating in small and medium-sized projects, and the adoption of a more cautious strategy has also led to a decrease in the total financing amount. This may be related to the poor performance of token TGEs in the first half of the year or the mismatch between market conditions and the valuation of early-stage projects and institutional investments.
Although the Bitcoin price has recovered to the previous bull market high in 2024, the scale of the primary market has not reached the same level. The continued decline in the scale and number of financing in Q3 may be related to the lack of synchronous rise in Altcoin sentiment and the poor performance of tokens in the first half of the year, which has affected investor confidence.
According to RootData's statistics, the top three tracks in terms of financing amount in Q3 were infrastructure, others, and DeFi. The total financing amount of the infrastructure track reached $745 million, accounting for 30.9% of the total financing amount.
It is worth noting that the "others" track had a total financing amount of $453 million, accounting for 18.8% of the total financing. There are multiple driving factors behind this phenomenon. The MEME sector remained hot in this quarter, and there was a significant increase in projects integrating AI and Web3. The expansion of the DePin and Bitcoin ecosystems also contributed to this. Investors and the market are looking for more new narratives and innovation.
The number of large-scale financing projects in Q3 was 43, an increase of 13.2% year-on-year; the total amount of M&A-type financing in the Top 10 reached $681 million
In terms of financing amount range, the number of early-stage investment ($5M and below) projects in Q3 was 137, a decrease of 14.4% quarter-on-quarter; the number of mid-stage investment ($5M-$10M) projects was 55, a decrease of 30.4% quarter-on-quarter. The number of large-scale investment ($10M and above) projects was 43, a decrease of 35.8% quarter-on-quarter. This trend may reflect that the major institutions have completed their "ambush" plan in Q2, and the scale of their investments in Q3 has gradually slowed down, coupled with the current difficulty for investment institutions to exit, it is expected that the market may have a significant upward trend in Q4 or the near future.
The project with the highest financing amount in Q3 2024 was the Bitcoin mining company Iris Energy, with a financing amount of $413 million. Closely followed was the Bitcoin mining company Stronghold, which obtained $175 million in financing through an acquisition. The third place was the modular blockchain network Celestia, which completed a $100 million OTC financing with a valuation of $350 million. It is worth noting that 3 out of the Top 10 financing projects were M&A-type, with a total amount of $681 million, accounting for 57.5% of the total amount of the Top 10.
There were 12 investment institutions that made more than 10 investments in Q3, with Robot Ventures becoming the most active investment institution in Q3 with 22 investments
According to RootData data, the 12 investment institutions that invested more than 10 times in 2024 Q3 participated in a total of 160 investments. Robot Ventures ranked first with 22 investments, and the popularity labels of its investment projects were infrastructure and DeFi. Closely followed were Binance Labs and OKX Ventures, both of which participated in 16 investments. These two leading exchanges were relatively active in the GameFi label-related projects, with 5 and 6 investments respectively, compared to other investment institutions.
Overall, infrastructure remains the most popular track, and these 12 institutions have invested in 65 projects with this label, and 56 projects with the DeFi label. In addition, DAO, Non-Fungible Token, and tools & information projects remain cold.
Tier1 funds are considering OTC as an investment theme, and the number of projects in the Solana, Bitcoin, Ton, and Base ecosystems is growing relatively rapidly
Large-scale investments occurred in the OTC market in Q3, and combined with the OTC financing issued by top projects such as SOL, Near, and Aptos, it indicates that more and more Tier1 funds are considering OTC as an investment theme to hedge the risks of difficulty in new project listings, liquidity tightening, and FDV being questioned.
In contrast to the market's doubts about the Ethereum ecosystem, the Ethereum ecosystem remains the most recognized infra by investors and developers, and its ecosystem completed 67 financing events in Q3, with a total financing amount of $481 million. With the start of the interest rate cut cycle, lower capital costs may drive on-chain prosperity, helping the recovery and innovation of the DeFi track, and the Ethereum ecosystem's leading position in this track will continue to benefit.
According to incomplete statistics, the number of projects in the Solana, Bitcoin, Ton, and Base ecosystems is growing relatively rapidly, and the total number of Ethereum applications still ranks first among public chains, exceeding 2,500. The crypto market is trying to solve the "high FDV and low liquidity" problem through the MEME economy, and Solana's Pump.fun has shone brightly, generating $100 million in revenue in just 217 days. Binance has continuously listed 5 projects in the Ton ecosystem, including Catizen, Hamster Kombat, and Dogs, and a large number of investors have flocked to the Ton ecosystem in a short period of time. The Bitcoin ecosystem may become the next user growth platform, in addition to Minting and Runes, the infrastructure development is particularly rapid (such as Babylon, Fractal).
Data analysis tools, creator economy, and prediction markets have become new emerging hot tags. High concurrency may become one of the main narratives of the next cycle of public chains
Based on the hot tags of RootData (with clicks exceeding 1,000), it can be found that the click volume of tags such as data analysis tools, creator economy, and prediction markets has risen rapidly, which may be attributed to the market influence of star projects, and indicates that the crypto market is more inclined towards product-market fit (PMF).
- Data analysis tools: RootData, SoSo Value, defillama...
- Creator economy: Story Protocol, Tari, Follow...
- Prediction markets: Polymarket, Limitless, JogoJogo...
The infrastructure track is still the primary choice of capital for blockchain, with its compliance and development prospects far superior to other types of blockchain projects. High concurrency and parallel EVM may become the next major narrative of public chains, and projects like Monad and MageETH are expected to help blockchain TPS values achieve exponential growth. Traditional giant enterprises are still accelerating their deployment in the Web3 industry, such as Sony launching the L2 network Soneium.
The hot TGE projects in Q4 reveal that projects like Monad with tens of millions or hundreds of millions in financing can have return multiples ranging from several times to hundreds of times, depending on the investment timing
Q4 hot TGE financing overview:
- Projects with total financing over $100 million include Monad, Farcaster, EigenLayer, Magic Eden, Berachain;
- Projects with total financing between $50-100 million include Babylon, Scroll, Morpho, Eclipse;
- Projects with total financing between $10-50 million include Movement, Puffer, Walletconnect, Sophon;
- Projects with total financing less than $10 million include Roam, Symbiotic, deBridge, Grass.
Representative institutional investors include CEXs institutions like Coinbase, OKX, Binance, as well as top institutions like Polychain, Hack VC, IOSG, Robot Ventures, Paradigm, Variant, a16z, Delphi Digital.
The hot TGE projects in Q4 2024 are mainly L1/L2 infrastructure, LRT and derivative DeFi, followed by the Solana ecosystem, RWA and DePIN applications
Q4 hot TGE financing overview: Monad received the highest financing and support from 8 top institutions, and is expected to be listed on Coinbase, Binance and OKX, with relatively low selling pressure (32x to 2x). Eigen received the third highest financing and support from 6 top institutions, with a post-TGE multiple of 43x to 3x, which is different from the high-multiple token trends that went live this year, with general selling pressure, and the valuation and institutional first-round unlocking are difficult to recoup the cost. Projects supported by 4-5 top institutions include Farcaster, Berachain, Scroll, Babylon, Morpho, Movement, among which Scroll, Babylon, and Movement are expected to have higher multiples, all with CEXs institution support, and are expected to achieve good exit liquidity in a good market environment.
Across the hot TGE projects in Q4, L1/L2 infrastructure continues to be favored by the market and institutions, receiving higher financing amounts and return multiples. Secondly, LRT and derivative DeFi have been driven by the research on ETH AVS and interest rates during the bear market, and the return rate and market heat have continued from Q1 to Q4. Solana ecosystem applications have rebounded rapidly after the FTX collapse in 2021, and are still supported by institutions and the market. RWA and DePIN have been driven by the market rebound and traffic in Q1, and institutions will unlock related tokens in Q4 and achieve considerable returns. Morpho, with over 5 top supports in the area of yield-bearing lending, is worth watching.
The liquidity of TGE in the first half of 2024 is scarce, and attention should be paid to projects with insufficient CEXs co-investment to address the exit channel and liquidity risks of top projects
New narratives & exit liquidity: From the cross-analysis of hot TGE projects, the exit channels of projects with financing over $10 million are basically covered by Coinbase, OKX and Binance. Polychain, Coinbase, Hack VC, OKX, IOSG, Robot, Paradigm saw a large number of project TGEs in Q4. The main problem facing TGE in the first half of 2024 is the lack of sufficient and effective exit liquidity, so investors should pay attention to projects with relatively large financing amounts but low CEXs co-investment, such as DePIN, Solana ecosystem projects and LRT projects. In the case of poor market performance, it is expected that such projects will face similar selling pressure as in the first half of the year; on the contrary, in the case of sufficient market liquidity, these unlocked projects will inject liquidity into the SOL and ETH ecosystems.
The overall financing data in Q3 declined, but institutions are still actively investing. For projects that are about to TGE, most of the last-round institutional investors in infrastructure may find it difficult to recoup their costs in the first-round unlocking due to the poor performance of Altcoins, which will affect whether the liquidity flows into the secondary market depending on the market conditions. In contrast, the Solana ecosystem, LRT and DePIN still have some residual heat in H1, and the last-round institutional investors who can achieve liquidity unlocking on Binance, Coinbase and OKX are expected to recoup their costs in the first-round unlocking, and may inject liquidity into quality assets and the primary market.
Institutions should closely monitor the performance of Altcoins to adjust their segmentation or boutique investment strategies, and project financing should be accelerated to actively reduce valuations or enhance the core competitiveness of products (including cash flow or leading effects). Retail investors should closely follow projects with relatively high basic multiples, and pay attention to the risk of price fluctuations during unlocking. The industry should consider the impact of major elections, interest rate policies, financial year-end reports before Christmas, and the liquidity withdrawal during the tax season in Q2 next year on the short-term price fluctuations of risk assets.
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Disclaimer
This report is produced by RootData Research. The information or opinions expressed in this report do not constitute investment strategies or recommendations. The materials, opinions and estimates contained in this report only reflect the judgment of RootData Research on the date of publication of this report. Past performance is not a basis for future performance. RootData Research may issue reports that are inconsistent with the information, opinions and estimates contained in this report. Readers should rely on their own judgment when using the information contained in this report.
