January Crypto Investment Summary: The number of financing deals increased by 17% month-on-month, and the financing amount hit a new low

Author: Gu Yu, Xi Xiangxiang

The past January was a watershed moment for both the primary and secondary cryptocurrency markets. Although the secondary market welcomed a long-awaited recovery, it will take some time for this to translate into the primary investment and financing market, which has led to a continued decline in financing amounts in January, setting new lows.

According to statistics from Rootdata, the cumulative financing amount disclosed in the cryptocurrency market in January 2023 was approximately $577 million, a decrease of 38% compared to December of last year. However, the number of investment and financing events increased by 17.5% month-on-month, reaching 94. The contrasting trends in these two data points are mainly due to a decrease in the average financing amount per project and a reduction in large-scale financing.

Figure 1: Changes in the number and amount of financing projects over the past year by month

Statistics show that there were 5 projects in January with financing amounts exceeding $20 million, namely Blockstream, QuickNode, PLAI Labs, Fastex, and =nil;. Compared to the frequent reports of several hundred million in financing in previous months, both the number of large financing projects and the financing amounts saw a significant decline in January.

Figure 2: Top 10 financing projects in January 2023

From a specific sector perspective, infrastructure, DeFi, and social entertainment are the most favored areas by venture capital firms, with the number of financing projects reaching 21, 14, and 13, respectively.

Figure 3: Overview of the number of financing projects in each sector in January 2023

Additionally, there were 6 merger and acquisition events in the cryptocurrency market this month, with 2 in the NFT and tools sectors, and the other 2 distributed in the infrastructure and DeFi sectors.

Figure 4: Overview of merger and acquisition events in January 2023

Below, this article will provide a detailed overview of the investment and financing market in January based on various sectors of the cryptocurrency industry.

Infrastructure

The infrastructure sector has always been a key area for venture capital firms. In January, a total of 21 infrastructure projects received financing, with a total amount reaching $155 million. This includes multi-signature wallet solution Momentum Safe, zero-knowledge proof platform =nil;, L1 platform Everscale, modular blockchain Sovereign, Sui-based wallet Ethos, Web3 infrastructure platform QuickNode, and NEAR-based customizable sidechain Calimero, among others.

Among these, Momentum Safe is a multi-signature wallet solution based on the Aptos ecosystem. MSafe adds an extra layer of security on top of the Move language, protecting user wallets, assets, code, and accounts, and providing secure infrastructure for the Move-based Web3 ecosystem. Thanks to high expectations for Aptos, MSafe secured $5 million in investment during its seed round, attracting excellent investors such as Jump Crypto, Coinbase Ventures, Shima Capital, and Redpoint China.

Additionally, =nil; is also worth noting. Since last year, the popularity of zero-knowledge proofs has remained strong, and =nil; is establishing a zero-knowledge proof market that will allow crypto protocols to outsource the production of zero-knowledge (ZK) proofs. Its promising prospects led venture capital firms such as Polychain, Blockchain Capital, and StarkWare to invest $22 million at a valuation of $220 million. Hyper Oracle, the ultimate Web3 middleware based on ZKP, received $3 million in Pre-seed round investment led by Sequoia China.

Gaming

In January, there were 8 financing events in the NFT category, raising approximately $47 million. This includes the crypto gaming platform Oh Baby Games, virtual pet game Neopets, Web3 gaming platform Intella X, and metaverse engine Createra, among others.

Among them, Intella X is a Web3 gaming platform that uses its unique reward service protocol "Contribution Proof Mechanism" to permanently reward contributors to its ecosystem with its native platform token, Intella X token. It received a significant investment of $12 million in its private round from Polygon Ventures, Animoca Brands, Magic Eden, and others.

Additionally, as a UGC metaverse engine, Creatora aims to provide the best platform for game creators to build, experience content, and profit through a wide range of tools and flexible protocols. Creatora secured $10 million in Series A funding led by A16Z. According to official information, the team is quite strong, with the CEO and user growth director having experience in building a UGC gaming platform with 30 million players, and the R&D director previously led product development and monetization for a social app with over 16 million DAU and $7 million in daily revenue. The product director has also led the commercialization of a creator platform with 10 million DAU.

Social Entertainment

In January, a total of 13 social entertainment projects announced financing events, with a cumulative financing amount of $6.9 million. This includes the next-generation social platform PLAI Labs, Web3 thought and opinion platform Polemix, community-driven reward ecosystem ValuesCo, open community StoryCo, and virtual gift protocol Gifto, among others.

PLAI Labs focuses on building the next-generation social platform using AI and Web3, allowing users to play, chat, battle, trade, and adventure together. Their first entertainment experience is the game Champions Ascension built on the platform. Additionally, they are also building an AI protocol platform that will help handle everything from UGC content to matching 2D to 3D asset rendering. It has received $32 million in seed round investment from A16Z and others.

NFT

In January, there were 7 financing events in the NFT category, raising approximately $23 million. This includes Web3 infrastructure Spatial Labs, metaverse platform Metahood, and Web3 fashion platform Syky, among others.

Spatial Labs focuses on developing software and hardware tools that connect brands and consumers based on NFTs. It launched its first chip product called LNQ in May 2022. LNQ uses Polygon to verify products and create "digital twins," which are virtual copies of physical objects. Additionally, Spatial Labs helps brands obtain consumer behavior data regarding their products, thereby opening new revenue models. It secured $10 million in its seed round led by Blockchain Capital.

DeFi

In January, there were 14 financing events in the DeFi category, raising approximately $42 million. This includes cross-chain protocol Squid, DeFi and SocialFi protocol STFX, Ethereum POS consensus protocol Obol Network, and yield aggregator AutoFarm, among others.

Three types of projects are worth mentioning. Derivatives projects like Rysk Finance provide on-chain market-making for DeFi derivatives while addressing long-standing industry complexities. Its flagship product, Dynamic Hedging Vault (DHV), is a new type of dynamic autonomous options AMM that generates uncorrelated returns for liquidity providers through trading options. Vest Exchange is a decentralized perpetual contract exchange on Arbitrum that allows users to trade perpetual contracts for almost any asset.

Staking protocols like Diva, which is an Ethereum liquid staking protocol operated by a fully distributed validator network, aim to be resistant to censorship and disruption. The network operates by utilizing distributed validation technology through a group of bonded node operators fulfilling staking duties in a non-custodial model. Obol Network is an Ethereum POS consensus protocol and ecosystem with a mission to eliminate single-point technical failure risks on Ethereum through distributed validator technology (DVT).

In the DEX sector, Squid, Elixir, and others announced financing. Squid is a cross-chain trading and liquidity routing protocol on the Axelar Network that enables trading and sending any native token between existing DEXs, allowing one-click trading of any asset between any applications and users. Elixir is a decentralized market-making protocol that interacts with centralized trading through API calls using market-making algorithms, bringing liquidity to long-tail crypto assets.

About Rootdata: Rootdata is a visual and structured data service provider for crypto projects, offering investment and financing data with more trading clues for crypto investors and entrepreneurs, aiming to become a data entry point for discovering quality crypto assets.

Website: https://www.rootdata.com/