Fundraising is down 24%, but the decentralized sector holds its own in a difficult year

Not surprisingly, DeFi and web3 fundraising have taken a hit in a year rocked by a bear market and a series of crypto scandals. What is revealing, however, is the amount of investment that continues to flow into the burgeoning sector.

In the third quarter, VCs and other investors poured nearly $3 billion into DeFi, NFTs, and metaverses, according to CB Insights, an investment data provider. While that’s a 24% drop from Q2, it’s still more than the $2.7bn investors poured into the decentralized sector in the same period last year.

Gets better

Furthermore, funding for blockchain companies in general is on track to hit a record $29 billion in 2022, a 10% improvement over last year, CB Insights said.

Still, don’t pop the corks just yet. In November, the failure of FTX, the number 2 crypto exchange worldwide, hit confidence in the entire blockchain sector. With $1 billion raised last month, funding for DeFi is only one seventh of the level it reached in November 2021, the peak of DeFi investment, according to data from DeFi Llama.

DeFi Ignas, a popular cryptanalyst, shared a chart showing a close correlation between the price of Bitcoin and monthly fundraising totals from the second half of 2020 onwards.

The analyst said Web3 projects executed 65 funding rounds in November, less than half the number in November 2021.

In any case, DeFi and web3 startups have received more than $23 billion in funding since the first quarter of 2021, according to CB Insights. And Ben Lakoff, host of the Crypto Mondays podcast, shared data showing that VC funding overall has fallen to its lowest level since the first half of 2020, according to CB Insights.

In that sense, the funding of web3 and DeFi is looking pretty good.