RootData: 2024 Q2 Web3 Industry Investment Research Report

Author: RootData Research

Table of Contents

I. Overview of Web3 Financing in Q2 2024:

• Total financing reached $2.75 billion, a year-on-year increase of 38.9%
• Financing in the social sector surged 650% quarter-on-quarter

II. Distribution of Project Financing Amounts in Q2 2024:

• The total number of financing events in the latter half of Q2 increased by 20.7% quarter-on-quarter
• The total financing amount of the Top 5 financing events increased by 81.25% quarter-on-quarter

III. Ranking of Institutional Activity in Q2 2024:

• The total investment number of the top ten institutions increased by 2% quarter-on-quarter
• Animoca Brands became the most active investment institution in Q2 with 36 investments

IV. Fundraising Situation of Web3 Investment Funds in Q2 2024:

• The total fundraising amount of Web3 investment funds in the first half of the year reached $1.38 billion
• Investors are leaning towards caution and compliance, with ETFs continuously driving Bitcoin's independent rise

V. Review of Hot Projects in Q2 2024:

• The airdrop season has arrived as expected, with high valuations and low circulation potentially suppressing token price performance
• Competition for Binance List Tokens is heating up, with over 30 large projects expected to conduct TGE in Q3
• The most core brands in the Web3 field are distributed across exchanges, underlying public chains, Web3 media, and analytical tools
• The X heat index makes it easier to discover Alpha projects and is highly correlated with investor sentiment

Summary

Web3 industry financing maintained strong momentum in Q2 2024, totaling $2.75 billion, a year-on-year increase of 38.9%. The social sector has emerged strongly, with total financing surging 650% quarter-on-quarter. The total net inflow for Bitcoin spot ETFs in Q2 reached $2.394 billion, a decrease of 80% quarter-on-quarter, and total assets under management decreased by 12.4% quarter-on-quarter.

In the latter half of Q2 2024, the total number of financing events increased by 20.7% quarter-on-quarter, a trend that may reflect a preference among investment institutions for strategic large-scale investments as the market stabilizes. Animoca Brands became the most active institution in Q2 with 36 investments. The top ten institutions saw a 71% increase in investments in the GameFi sector.

Paradigm announced the completion of $850 million in fundraising, becoming the largest fundraising event in Q2 and even in the first half of 2024. During the bull market phase that began at the end of 2023, the total fundraising amount for Web3 funds was more than ten times lower than the last bull market, and BTC prices are no longer driven by inflows from Web3 funds.

High FDV and low circulation projects see search volumes peak just before TGE, followed by a sharp decline. The competition for Binance List Tokens is fierce: the average valuation of Launchpool projects reached $217 million, with an institutional hit rate of less than 2%, and over 30 large projects are expected to conduct TGE in Q3.

I. Total Financing in Q2 2024 Reached $2.75 Billion, a Year-on-Year Increase of 38.9%; Financing in the Social Sector Surged 650% Quarter-on-Quarter

Bitcoin Price Trends in Q2 2024 and Total Financing in the Web3 Industry Source: RootData

In Q2 2024, Bitcoin prices experienced significant fluctuations. On April 8, Bitcoin reached a quarterly high of $71,630, then fell to around $58,300 on May 1. As of June 30, Bitcoin prices had dropped about 13% from the beginning of the quarter. The total net inflow for Bitcoin spot ETFs in Q2 reached $2.394 billion, down 80% from Q1. As of June 30, assets under management stood at $51.127 billion, a decrease of about 12.4% from Q1. In this complex market environment, the enthusiasm for Web3 primary market financing remains strong. According to RootData, there were 418 financing events in the Web3 primary market in Q2 2024, totaling $2.75 billion, a year-on-year increase of 38.9%.

Top 3 Financing Amounts in Q2 2024 Source: RootData

According to RootData, the top three sectors by financing amount in Q2 were infrastructure, DeFi, and social. The total financing amount in the infrastructure sector reached $1.016 billion, a quarter-on-quarter increase of 145%. Notably, the social sector surged, with total financing reaching $227 million, a quarter-on-quarter increase of 650% and a year-on-year increase of 261%.

The strong performance of the infrastructure sector is related to several Layer 1 and Layer 2 projects receiving large amounts of financing, such as Monad raising $225 million and Berachain raising $100 million. In the DeFi sector, there were 56 projects with financing amounts in the million-dollar range, primarily in seed rounds, indicating a large influx of new projects. The explosive growth in the social sector may be attributed to projects like Farcaster successfully balancing technological innovation with user experience while fostering a high-quality, low-noise community culture. This innovative model may address the sustainability issues of early SocialFi projects and provide new possibilities for attracting a broader user base, thus driving rapid development and significant investment inflows in the entire sector.

II. The Total Number of Financing Events in the Latter Half of Q2 Increased by 20.7% Quarter-on-Quarter, and the Total Financing Amount of the Top 5 Financing Events Increased by 81.25% Quarter-on-Quarter

Distribution of Project Financing Amounts in Q2 2024 Source: RootData

In terms of financing amount ranges, the number of early-stage investments (under $5M) in Q2 was 160, showing a slight quarter-on-quarter decline; the number of mid-stage investments ($5M-$10M) was 79, a year-on-year increase of 61.2%. The total number of late-stage financing events reached 146, a quarter-on-quarter increase of 20.7%. This trend may reflect that as the market stabilizes, investment institutions may be more inclined to seek short-term exit opportunities in anticipation of the next market upturn.

The top five projects in terms of financing amount in Q2 raised a total of $725 million, an increase of 81.25% compared to Q1. Among them, Monad secured $225 million led by Paradigm, ranking first. Notably, Farcaster completed a $150 million financing at a $1 billion valuation, following a period of relatively low financing activity in this sector, where the total financing amount disclosed in Q1 was only about $70 million. Additionally, Berachain's valuation reached $1.5 billion in its Series B financing in April 2024, representing a 257% increase in valuation within a year.

Top 5 Financing Amounts in Q2 2024 Source: RootData

III. The Total Investment Number of the Top Ten Institutions Increased by 2% Quarter-on-Quarter, with Animoca Brands Becoming the Most Active Investment Institution in Q2 with 36 Investments

Ranking of Institutional Activity in Q2 2024 Source: RootData

According to RootData, the top ten investment institutions in Q2 2024 participated in a total of 202 investments, reflecting a quarter-on-quarter increase of about 2%. OKX Ventures led the way in Q1 with 30 investments but dropped to 25 in Q2 while remaining active. Infrastructure remains the most popular sector, with the top ten institutions making 81 investments in this sector, accounting for about 40% of their total investments in Q2.

The top ten investment institutions made a total of 53 investments in the GameFi sector in Q2, a 71% increase compared to Q1. This explosive growth may stem from projects in this sector transitioning from simple "play-to-earn" models to more complex and engaging gaming experiences, which not only enhance game quality and user experience but also maintain the sustainability of the economic model. In contrast, the DAO and NFT sectors, lacking innovation, continue to exhibit the low activity levels seen in Q1.

View real-time on-chain holdings data of institutions: OKXVentures; HashKeyCapital; The Spartan Group

IV. Web3 Investment Funds Raised $1.38 Billion in the First Half of the Year, with Investors Leaning Towards Caution and Compliance, While Bitcoin Maintains Independent Rise

Number and Amount of Fundraising for Web3 Venture Funds (2015-2024Q2) Source: RootData

Public data since 2015 shows that the Web3 sector has seen a total of 177 fundraising events, with a total amount exceeding $39.6 billion. Large-scale external capital drove the bull market from 2021 to 2022, leaving behind many highly valued projects such as StarkNet and zkSync.

Although the pace of capital inflow has slowed in the past two years, it remains significantly higher than in 2020 and shows an upward trend. In the first half of 2024, Web3 funds completed $1.38 billion in fundraising, with Paradigm announcing the completion of $850 million on June 13, making it the largest fundraising event in Q2 and even in the first half of 2024.

During the bull market phase that began at the end of 2023, the total fundraising amount for Web3 funds was more than ten times lower than the last bull market, and Bitcoin prices are no longer driven by inflows from Web3 funds. This may be due to traditional high-net-worth users being more cautious, investing in Web3 currencies through compliant channels like ETFs, and fearing becoming the buyers during the exit wave of the last bull market, thus driving Bitcoin's independent rise.

V. Review of Hot Projects in Q2 2024

5.1 The Airdrop Season Has Arrived as Expected, with High Valuations and Low Circulation Potentially Suppressing Token Price Performance

RootData Q2 Hot Search Token List (Top 12) Source: RootData

In Q2, Bitcoin fluctuated widely between $57,000 and $72,000, with many star projects choosing to conduct TGE during this window, such as Wormhole, io.net, zkSync, Layerzero, and Blast. Among the 12 projects that conducted TGE and were most searched in Q2, it was found that search volumes peaked just before TGE, followed by a sharp decline. At the same time, the attention value was significantly influenced by Bitcoin prices and was closely related to confidence in the Web3 market.

Many high-attention projects carry the aura of "high valuation, low circulation." RootData's previous research indicated that the average valuation of Binance Launchpool projects over the past three years was $217 million, while OKX Jumpstart projects averaged $373 million. Additionally, for projects with FDV under $1 billion and not listed on Binance, only over 30% of them did not experience a valuation inversion between primary and secondary markets.

Between 2021 and 2022, a large influx of capital into the primary market adopted aggressive valuation strategies amid optimistic market sentiment, leading many Web3 funds to blindly choose high-valuation investment strategies. However, these projects failed to demonstrate sustainable business models. Additionally, the liquidity contraction brought about by the dollar's interest rate hikes has also impacted the Web3 market, possibly being one of the external reasons investors are reluctant to purchase new tokens.

5.2 Competition for Binance List Tokens Is Heating Up, with Over 30 Large Projects Expected to Conduct TGE in Q3

High FDV and Large Financing Projects Expected to TGE in Q3 Source: RootData

RootData's list of expected TGE projects for Q3 includes 30 large financing and high FDV star projects, such as Monad, Fuel, Scroll, and Succinct, all of which have a high probability of being listed on Binance.

Statistics from 288 investors' portfolios reveal that the average number of Binance Launchpool projects in their portfolios does not exceed 2%. Among nearly 30 Binance Launchpool projects, 21 received investment from Binance Labs, accounting for over 11% of their portfolios.

Due to Binance's trading depth, slippage advantages, and competitive contract rates, the fiercely competitive listing environment on Binance has a profound impact on the market. Choosing to conduct TGE on Binance allows project teams to effectively leverage its market advantages and platform resources, laying a solid market foundation for the long-term development of their projects.

5.3 The Most Core Brands in the Web3 Field Are Distributed Across Exchanges, Underlying Public Chains, Web3 Media, and Analytical Tools

X Influence Index Source: RootData

RootData's X Influence Index conveniently showcases the most influential Web3 projects, with the core 12 projects distributed across four key areas:

• Exchanges: Coinbase, Binance, Uniswap
• Underlying Public Chains: Bitcoin, Ethereum, Solana, Polygon
• Web3 Media: CoinDesk, The Block, Cointelegraph
• Analytical Tools: CoinMarketCap, Messari

5.4 The X Heat Index Makes It Easier to Discover Alpha Projects and Is Highly Correlated with Investor Sentiment

The X heat index, as a market dynamics observation tool, quickly attracts many potential Alpha projects due to its close linkage with X platform data and frequent updates. At the same time, this list has become an important window for investors to understand market sentiment, with the heat index showing an overall downward trend in Q2:

• April: Optimistic sentiment in the Web3 market, high project activity
• May: Market fluctuations, cautious investor attitudes
• June: BTC rebounds but does not break previous highs, market liquidity declines, and social heat drops to a freezing point

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