Messari Q3 Report: Analysis of Liquid Investment Portfolios of Crypto Funds, Ordinary Investors May Be Able to Replicate

Author: Mason Nystrom

Translation: The Path of DeFi

Savvy capital investors—venture capital funds, hedge funds, liquidity providers—are investing across various sectors, including DeFi, NFTs, Web3, infrastructure, and the metaverse, based on different stages of growth (from under $50 million to over $1 billion).

We have tracked many top venture capital (VC) firms and hedge funds in the crypto space and documented their liquid portfolios (assets traded in the market). This certainly may miss equity investments or networks that have not yet launched.

Overall, our analysis indicates that a total of 53 funds hold 228 unique assets across different sectors, including smart contracts, DeFi, Web3, scalability, interoperability, and NFTs.

To find the portfolio filter list, you can visit the Messari filter, where the filters can be viewed in the community section:

• A16z
• Alameda Research
• Dragonfly Capital
• Electric Capital
• Fabric Ventures
• Framework Ventures
• The LAO
• Delphi Digital Ventures

The transparency of these portfolios and the availability of most crypto assets ensure that both institutional and retail investors can participate (and may also suffer losses simultaneously).

Messari Fund Analysis

A quick review of the Q2 Messari filter analysis. Messari conducted the same analysis in April, at which time there were only 35 funds, and the top 5 assets held were: Polkadot, Terra, NEAR Protocol, Oasis, Solana.

Q3 Messari Filter Analysis

After analyzing all portfolios, we found that the largest asset invested in among the 53 tracked funds remains Polkadot (DOT). In fact, 21 of the 53 funds hold DOT, meaning that 39% of the funds we track have a vested interest in the success of Polkadot. An important consequence of this is that large DOT-holding funds may be the ultimate decision-makers on which projects receive the first few parachains.

Note that we assume these funds mostly hold Ethereum and Bitcoin, so we have omitted them from our analysis.

Among the tracked portfolios, the second most popular assets are NEAR Protocol, Terra, and Oasis Network, all tied. Terra (LUNA) is an algorithmically controlled, minting tax-sharing stablecoin platform that recently enabled IBC to connect with the Cosmos ecosystem. Near Protocol (NEAR) and Oasis Network (ROSE) are smart contract platforms, but so far, they have lower adoption rates compared to competitors like Solana, Ethereum, Cosmos, and Avalanche.

Among the assets held by the funds, the fifth-ranked companies are Arweave, Maker, Nervos Network, and Solana. Notably, Arweave's stock price has surged significantly since the previous quarter's analysis.

In terms of the most invested assets, Solana has the highest circulating market cap (BTC and ETH are omitted here). DODO has a lower circulating market cap among the assets held by the top 15 funds, while Arweave has a lower circulating market cap among the top 5.

Similar to the previous quarter, venture capitalists clearly see that the potential total market size within the smart contract and DEX sectors is substantial, as these are the most frequently invested areas among top fund assets.

However, it is worth noting that while file storage is a unique category, it holds a strong market share compared to other niche markets. Finally, as Web3 becomes a focal point, more venture capital investors are looking for data management-type protocols, including indexers like The Graph and Covalent. While The Graph remains the primary indexer, its competitor Covalent has gained strong support from various companies, pushing it into the top 50 investment assets.

Final Thoughts: Investing Like a Crypto Fund

Investing like a crypto fund, risk or hedging has never been easier. An ordinary investor can fully replicate these portfolios and mimic any fund they favor. However, while on the surface, copying the trades of a well-known venture capital firm may seem like a good strategy, it is important to remember that unaccredited or non-professional investors still do not have equal opportunities.

Most of these funds typically accept private placements at much lower valuations, while funds focused on short-term investments are waiting to liquidate a portion of tokens that have brought record profits to investors. Additionally, during bull markets, liquid assets, especially newer projects, often trade at a premium due to anticipated higher future valuations.

While individual investments in early crypto projects still face barriers, the opportunities are ten times better than in the traditional financial world. The era of the ordinary investor is approaching, and cryptocurrency will become a primary avenue for growth.