RootData: 2024 Q2 Web3 Industry Investment Research Report

Author: RootData Research

1. Overview of Q2 Web3 financing in 2024:

Total financing amount reached US$2.75 billion, a year-on-year increase of 38.9%
The total social track financing surged by 650% month-on-month

2. Distribution of project financing amount in Q2 2024:

Q2 The total number of mid- and late-stage financing increased by 20.7% month-on-month
The top 5 financing amount total financing amount increased by 81.25% month-on-month

3. 2024 Q2 Institutional Activity Ranking:

The total investment of institutions with the top ten operations increased by 2% month-on-month
Animoca Brands takes 36 shots to become the most active investment in Q2

4. Fundraising situation of Web3 investment funds in Q2 2024:

The total amount of Web3 investment funds raised in the first half of the year reached US$1.38 billion
Investors tend to be cautious and compliant, and ETFs continue to drive Bitcoin to rise independently

5. Review of the hot searches for Q2 projects in 2024:

The airdrop season is coming as scheduled, with high valuation and low circulation modes likely to curb coin price performance
Binance List Token competition is fierce, and more than 30 large-scale projects are expected to be TGE in Q3
The most core brands in the Web3 field are distributed in the fields of exchanges, underlying public chains, Web3 media and analytical tools.
X’s popularity surge list makes it easier to discover Alpha projects and are highly correlated with investor sentiment

summary

Web3 industry financing maintained a strong momentum in Q2 2024, with a total amount of US$2.75 billion, a year-on-year increase of 38.9%.The social track has emerged, with the total financing soaring by 650% month-on-month.The total net inflow of Bitcoin spot ETFs in Q2 reached US$2.394 billion, a month-on-month decrease of 80%, and the total asset management volume decreased by 12.4% month-on-month.

The total number of mid- and late-stage financing in Q2 2024 increased by 20.7% month-on-month. This trend may reflect that as the market stabilizes, investment institutions are more inclined to make strategic large-scale investments in advance.Animoca Brands became the most active institution in Q2 with 36 investments.The top ten institutions’ investment in the GameFi track increased by 71% month-on-month.

Paradigm announced that it had completed a US$850 million fundraising, becoming the largest fundraising event in the Q2 quarter and even the first half of 2024.During the bull market rising stage that started at the end of 2023, the total amount of fundraising of Web3 funds was more than 10 times lower than the previous bull market, and the BTC price is no longer driven by the inflow of Web3 funds.

High FDV low circulation projects are about to reach their peak when TGE, but then they are down sharply.Competition at Binance List Token is fierce: The average valuation of Launchpool projects is US$217 million, with an institutional investment rate of less than 2%. It is expected that more than 30 large-scale projects will undergo TGE in Q3.

1. The total financing amount in Q2 2024 reached US$2.75 billion, a year-on-year increase of 38.9%; the total financing amount of social track surged by 650% month-on-month

Bitcoin price trend in Q2 2024 and total financing amount of Web3 industry Source: RootData

Bitcoin price experienced significant fluctuations in Q2 2024.On April 8, the price of Bitcoin reached a quarterly high of $71,630 before falling to a quarterly low of around $58,300 on May 1.As of June 30, Bitcoin price fell about 13% from the beginning of the quarter.The total net inflow of Bitcoin spot ETFs in Q2 reached US$2.394 billion, down 80% from Q1.As of June 30, the scale of asset management was US$51.127 billion, down about 12.4% from Q1.In this complex market environment, the popularity of Web3 primary market financing remains unabated.According to RootData statistics, a total of 418 financing events occurred in the primary market of Web3 in Q2 2024, with a total financing amount of US$2.75 billion, a year-on-year increase of 38.9%.

Top 3 tracks of investment and financing amount in Q2 2024 Source: RootData

According to RootData statistics, the top three tracks in Q2 financing are infrastructure, DeFi and social networking.The total financing amount of infrastructure track reached US$1.016 billion, a month-on-month increase of 145%.It is worth noting that the social track has emerged, with a total financing of US$227 million, a surge of 650% month-on-month and a year-on-year increase of 261%.

The strong performance of the infrastructure track is related to the large financing of multiple Layer1 and Layer2 projects, such as Monad raised $225 million and Berachain raised $100 million.In the DeFi track, there are 56 projects raised in the million-dollar level, mainly seed rounds, indicating that new projects are emerging in large numbers.The biggest reason for the explosive growth of the social track is that projects represented by Farcaster successfully balance technological innovation with user experience, while cultivating a high-quality and low-noise community culture.This innovative model may solve the sustainability of early SocialFi projects and also provides new possibilities for attracting a wider user base, thus promoting the rapid development of the entire track and the influx of large investment.

2. The total number of mid- and late-stage financing increased by 20.7% month-on-month, and the total financing amount of Top 5 financings increased by 81.25% month-on-month.

Distribution of financing amounts for Q2 project in 2024 Source: RootData

From the perspective of financing amount range, the number of early investment (below $5M) projects in Q2 was 160, a slight decrease from the previous month; the number of medium-term investment ($5M-$10M) projects was 79, a year-on-year increase of 61.2%.The total number of mid- and late-stage financing reached 146, a month-on-month increase of 20.7%.This trend may reflect that investment institutions may prefer short-term investment opportunities as the market stabilizes and may be preparing for the expected next round of market rises.

The top five projects in Q2 2024 received a total of US$725 million in financing, an increase of 81.25% compared with Q1.Among them, Monad ranked first in the list of US$225 million in financing led by Paradigm.It is worth noting that Farcaster completed a US$150 million financing with a valuation of US$1 billion. Previously, the overall financing status of the track has been relatively sluggish. The total financing amount of projects disclosed in Q1 was only about US$70 million.In addition, Berachain’s valuation has reached US$1.5 billion in its Series B financing in April 2024.Its valuation increased by 257% within one year.

Top 5 financing amounts in Q2 2024 Source: RootData

3. The total investment of the top ten institutions in Q2 increased by 2% month-on-month, and Animoca Brands took 36 operations to become the most active investment in Q2.

2024 Q2 Institutional Activity Ranking Source: RootData

According to RootData data, the top ten investment institutions with the most investments in Q2 2024 participated in a total of 202 investments, a month-on-month increase of about 2%.OKX Ventures topped the list with 30 shots in Q1, and although it dropped to 25 times in Q2, it still remained active.Infrastructure remains the most popular track, with the top ten institutions making 81 moves on the track, accounting for about 40% of their total investment in Q2.

The top ten investment institutions made 53 moves in the GameFi track, an increase of 71% compared with Q1.This explosive growth may be due to the track’s projects are shifting from a simple “play-making” model to a more complex and attractive gaming experience. This transformation not only improves game quality and user experience, but more importantlyMaintain the sustainability of economic models.In contrast, the lack of innovation in DAO and NFT tracks still continue the sluggish state of Q1.

View real-time data on institutional holdings: OKX Ventures; HashKey Capital; The Spartan Group

4. Web3 investment fund raised $1.38 billion in the first half of the year, investors tended to be cautious and compliant, and Bitcoin maintained an independent rise.

Number and amount of Web3 venture capital fundraising (2015-2024Q2) Source: RootData

Public data since 2015 shows that there have been 177 fundraising incidents in the Web3 field, with a total amount of more than US$39.6 billion.Large-scale external capital has driven the bull market outbreak from 2021 to 2022, and has left behind a large number of highly valued projects, such as StarkNet and zkSync.

Although the speed of capital entry has slowed down in the past two years, it is still far higher than in 2020 and shows an upward trend.In the first half of 2024, Web3 Fund has completed a fundraising of US$1.38 billion, of which Paradigm announced on June 13 that it had completed a fundraising of US$850 million, becoming the largest fundraising event in the Q2 quarter and even in the first half of 2024.

During the bull market rising stage that started at the end of 2023, the total amount of fundraising of Web3 funds was more than 10 times lower than the previous bull market, and the price of Bitcoin is no longer driven by the inflow of Web3 funds.This may be because traditional high-net-worth users are more cautious, investing in Web3 currency through compliant channels such as ETFs, and are worried about becoming the buyer of the previous bull market exit, which has promoted the sole rise of Bitcoin.

5. Review of the hot searches for Q2 projects

5.1 The airdrop season arrives as scheduled, with high valuation and low circulation modes likely to curb currency price performance

RootData Q2 Hot Token List (Top12) Source: RootData

Bitcoin fluctuated wide in Q2 at $57,000 – $72,000, and many celebrity projects chose to perform TGE during this window period, such as Wormhole, io.net, zkSync, Layerzero, Blast, etc.Among the 12 projects with the highest TGE searches in Q2, it was found that the search volume reached its peak when the project was about to TGE, but then it fell sharply.At the same time, the attention value is significantly affected by the price of Bitcoin, which is closely related to the confidence of the Web3 market.

Many projects with high attention have the halo of “high valuation and low circulation”. Previous research by RootData pointed out that the average valuation of the Binance Launchpool project in the past three years was US$217 million, and the average valuation of the OKX Jumpstart project was US$373 million.In addition, only more than 30% of projects with FDV within US$1 billion and not on Binance have no valuation inversions in Level 1 or 2.

Between 2021 and 2022, a large number of primary market capitals have poured in, adopting radical valuation strategies, and under optimistic market sentiment, many Web3 funds blindly choose high-valuation investment strategies.However, these projects failed to demonstrate a sustainable business model.At the same time, the shrinking liquidity caused by the US dollar interest rate hike has also had an impact on the Web3 market, which may be one of the external reasons why investors are unwilling to buy new tokens.

5.2 Binance List Token competition is fierce, and more than 30 large-scale projects are expected to be TGE in Q3

Q3 may bring TGE’s high FDV and large-scale financing projects Source: RootData

The Q3 TGE project list released by RootData is expected to include 30 large-scale financing and high-FDV star projects, such as Monad, Fuel, Scroll, Succinct, etc., which are highly likely to be launched on Binance.

According to statistics on the investment portfolios of 288 investors, it was found that the average number of Binance Launchpool projects accounts for no more than 2% of the investment portfolio. 21 of the nearly 30 Binance Launchpool projects are invested by Binance Labs, accounting for their portfolioMore than 11%.

Due to Binance’s trading depth and slippage advantages, as well as the competitiveness of contract fee rates, Binance’s fiercely competitive currency listing environment has a profound impact on the market. The project party chooses to conduct TGE on Binance to effectively utilize its market advantages and platform resources to provide projects withThe long-term development of the company has laid a good market foundation.

5.3 The most core brands in the Web3 field are distributed in the fields of exchanges, underlying public chains, Web3 media and analysis tools

X Influence Index Source: RootData

RootData’s X Influence Index conveniently displays the most influential Web3 projects to users, with 12 core projects distributed in 4 key areas:

Exchange: Coinbase, Binance, Uniswap
Low-level public chains: Bitcoin, Ethereum, Solana, Polygon
Web3 Media: CoinDesk, The Block, Cointelegraph
Analysis tools: CoinMarketCap, Messari

5.4 X’s popularity surge list makes it easier to discover Alpha projects and are highly correlated with investor sentiment

As a market dynamic observation tool, X popularity list has quickly attracted many potential Alpha projects due to its close linkage with X platform data and has been updated frequently.At the same time, this list has become an important window for investors to understand market sentiment, and the popularity value has been declining overall in Q2:

April: Web3 market sentiment is optimistic and project activity is high
May: Market fluctuates, investors are cautious
June: BTC rebounded before breaking its previous high, market liquidity declined, and social heat dropped to freezing point