Exploring Institutional Investment Trends and Project Selection in the Crypto Industry During Bear Markets
TechFlow Selected TechFlow Selected
Exploring Institutional Investment Trends and Project Selection in the Crypto Industry During Bear Markets
This article introduces institutional investment trends in the first half of this year, as well as the sectors and projects invested in by top investment firms.
Navigating Web3 tides with focused insightsAuthor: Day
According to data from RootData, the crypto industry raised $26.77 billion in 2022 across 1,528 funding rounds. However, fundraising in the first half of 2023 has significantly declined. In just over six months, the global crypto market has raised a total of $4.774 billion through 497 deals—representing an 80% drop compared to 2022. This downturn stems partly from the collapse of Luna and FTX, which dampened institutional interest in crypto investments, and also reflects broader bearish market conditions.
Source: rootdata.com
Monthly investment volume, Source: DefiLlama
Most top-tier investment firms have seen portfolio drawdowns of 70-80%. In this article, we’ll explore investment trends among major institutions in the first half of 2023 and examine which sectors and projects they’ve backed.
Value of ERC-20 Tokens held by institutions, Source: Dune
Crypto Market Funding Performance in 2023
1. Institutional Fundraising:
Institutional investment amounts and frequencies, Source: rootdata.com
According to RootData, as of early June 2023, sectoral breakdowns within the total $3.66 billion raised were as follows:
- Infrastructure: 139 deals, $1.379 billion (37.6%)
- Others: 61 deals, $540 million (14.5%)
- DeFi: 88 deals, $410 million (11.2%)
- CeFi: 34 deals, $400 million (10.9%)
- Gaming: 63 deals, $390 million (10.7%)
- Social & Entertainment: 43 deals, $240 million (6.7%)
- NFT: 52 deals, $160 million (4.5%)
- Tools & Information Services: 31 deals, $110 million (3.5%)
- DAO: 4 deals, $17 million (0.5%)
It is evident that institutions show strong preference for infrastructure and DeFi sectors, while showing relatively less interest in DAO, tools & information services, and NFTs. This may also be influenced by differing market cap ceilings across sectors—infrastructure projects typically command higher valuations than others.
2. Other Fundraising Channels
Other fundraising activities, Source: cryptorank.io
Additionally, platforms raised $210 million from non-institutional investors by June 10.
Sector distribution, Source: cryptorank.io
In fundraising from other investors, GameFi and blockchain services dominate. Most funds are concentrated on four chains: Ethereum, Arbitrum, Polygon, and BNB.
Distribution across blockchains, Source: cryptorank.io
Active Investment Firms in 2023
Source: rootdata.com
Next, we analyze which investment firms remain active in 2023 based on the number of projects they've invested in, identifying those still actively deploying capital.
1. DWF Labs: 30 investments
DWF Labs, a subsidiary of Digital Wave Finance, has drawn attention due to its frequent investments in 2023. It primarily supports Web3 companies with token listing, market-making, and OTC trading solutions. The firm conducts spot and derivatives trading on over 40 top-tier exchanges, ranking among the top five globally in crypto trading volume.
In 2023, it invested in 30 projects, committing over $300 million (note: some figures are estimates due to undisclosed amounts or multi-investor rounds). DWF Labs tends to invest in projects that have already issued tokens and listed on exchanges, such as EOS, ACH, CFX, and FET.
2. Coinbase Ventures: 24 investments
Coinbase Ventures is the investment arm of Coinbase, dedicated to advancing the crypto/Web3 ecosystem and supporting Coinbase’s mission of increasing economic freedom worldwide. In 2023, it invested in 24 projects, totaling nearly $200 million.
Coinbase Ventures focuses heavily on infrastructure, including Ethereum restaking protocol EigenLayer, cloud platform Chaos Labs, and Mauve—a compliant DEX for traditional finance.
3. HashKey Capital: 21 investments
HashKey Capital is part of Hong Kong-based digital asset group HashKey Group. It invests across the blockchain ecosystem—including public chains, protocols, applications, and crypto financial service providers—and offers advisory and investment support to help startups targeting developers, enterprises, and end-users expand in Asia. In 2023, it invested in 21 projects, totaling nearly $130 million.
HashKey Group has invested in infrastructure, gaming, NFTs, etc., including Chaos Labs, Karate Combat, PolyHedra, and cross-chain NFT platform Tabi.
4. Shima Capital: 19 investments
Shima Capital is a San Francisco-based venture capital firm focused on early-stage crypto assets and blockchain startups, providing both funding and strategic resources.
In 2023, it made 19 investments, totaling close to $100 million. Shima Capital targets infrastructure, NFTs, entertainment, and gaming—with six gaming-related investments. Notable bets include public chains Berachain and Monad.
5. Polygon Ventures: 18 investments
Polygon Ventures supports visionary teams within the Polygon and multichain ecosystems. It collaborates closely, leveraging Polygon’s strengths in operations, technology, distribution, and strategic partnerships to ensure project success.
In 2023, Polygon Ventures invested in 18 projects, totaling over $80 million. Its investments span infrastructure, gaming, and NFTs—with 10 related to gaming. Major investments include Chaos Labs and Web3 gaming platform Intella X.
6. Balaji Srinivasan (individual investor): 18 investments
Balaji S. Srinivasan is known as a "one-man institution" in crypto angel investing. A former CTO of Coinbase and general partner at A16z, he was an early backer of many successful tech and crypto ventures, including Alchemy, Ava Labs, Chainlink, Clubhouse, Dapper Labs, Ethereum, Instadapp, NEAR Protocol, Opensea, and Solana. He is also co-founder of Earn.com (acquired by Coinbase), Counsyl (acquired by Myriad), Teleport (acquired by Topia), and Coin Center.
In 2023, Balaji S. Srinivasan invested in 18 projects, totaling nearly $120 million. His focus remains on infrastructure, with significant investments in Chaos Labs, zero-knowledge trust layer Proven, decentralized social protocol Lens, and crypto insurance firm Evertas.
7. Animoca Brands: 16 investments
Animoca Brands is a Web3 gaming software company and venture capital firm, best known for The Sandbox. Animoca Brands aims to grant digital ownership to global gamers and internet users, creating new asset classes, play-to-earn economies, and a fairer digital framework contributing to the open metaverse.
In 2023, Animoca Brands invested in 16 projects, totaling approximately $110 million. Its investments span infrastructure, NFTs, and gaming. Key investments include NFT super-app OP3N, crypto payment gateway Transak, Web3 gaming platform Intella X, and cross-chain NFT marketplace Tabi.
8. NGC Ventures: 16 investments
NGC Ventures is a VC firm specializing in blockchain and distributed ledger technologies. In 2023, it invested in 16 projects totaling $170 million. Its focus lies in infrastructure and DeFi. Major investments include cross-chain interoperability protocol LayerZero and PolyHedra, a Web3 interoperability infrastructure.
9. Big Brain Holdings: 15 investments
Big Brain Holdings is a crypto fund investing in pre-seed, seed, and early-stage projects. The fund believes in the future of crypto assets and backs pioneering teams at the frontier of blockchain innovation.
In 2023, it invested in 15 projects, totaling around $60 million. Its portfolio spans infrastructure, DeFi, NFTs, and gaming. Notable investments include Web3 gaming platform Intella X and zkLink, a multi-chain L2 network focused on trading.
Major Funded Projects in 2023
Now let's look at projects that raised over $50 million in 2023. Given current market conditions, securing such large sums suggests strong fundamentals. However, institutional investments can be opaque—officially disclosed amounts, actual disbursements, whether cash or resource support, are often unclear to retail investors. Consider this analysis as reference only. Below are key projects ranked by funding size, with investor details limited to those who invested in 2023.
Source: rootdata.com
1. Metaco: Acquired by Ripple for $250 million
Metaco is a Swiss-based digital asset custody provider serving global custodians, major banks, financial institutions, and corporations. Its flagship product, Harmonize, enables institutions to manage the entire DeFi lifecycle—from custody and trading to tokenization, staking, and smart contract management—seamlessly connecting them to the DeFi world. This acquisition allows Ripple to integrate Metaco’s technology into its offerings for custody, issuance, and settlement of tokenized assets.
2. Blockstream: $125 million debt financing
Investors: Kingsway Capital, Fulgur Ventures
Blockstream, founded in 2014, is a veteran developer of Bitcoin and blockchain infrastructure. It focuses on building new infrastructure for traditional finance, centered on Bitcoin sidechains and related blockchain applications. The company has launched several products, including the Liquid Bitcoin sidechain, Blockstream Green wallet, crypto transaction data tools, and Bitcoin block production hosting services. New funds will expand its mining infrastructure to meet growing demand for institutional custody services.
3. LayerZero: $120 million Series B at $3 billion valuation
Investors: a16z, Sequoia Capital, Christie’s, Circle Ventures, among others
Launched in 2021, LayerZero is a cross-chain interoperability protocol focused on message passing between blockchains. It uses efficient gas consumption and immutable smart contracts to transmit lightweight messages across chains. LayerZero currently supports over 30 chains including Ethereum and BNB Chain, with strong adoption and rapid ecosystem growth across DeFi, NFTs, and bridges.
4. Worldcoin: $115 million Series C
Investors: Blockchain Capital, a16z Crypto, among others
Worldcoin is a crypto project founded in 2020 by Sam Altman, co-creator of ChatGPT, aiming to distribute Worldcoin tokens freely to everyone, building the world’s largest and most inclusive crypto network. Worldcoin consists of three core components:
- World ID: A privacy-preserving decentralized identity protocol
- Worldcoin (WLD): A utility and governance token distributed freely worldwide
- World App: A wallet enabling global payments, purchases, and transfers
Currently, Worldcoin faces mixed reactions due to privacy concerns.
5. Ledger: $108 million Series C1 at $1.416 billion valuation
Investors: True Global Ventures, Cité Gestion SPV, among others
Ledger is one of the most well-known hardware wallet providers in crypto. Since its founding in 2014, it has sold over 6 million devices across more than 200 countries. Recently, it sparked community backlash by launching a key recovery service.
7. Auradine: $81 million Series A at $500 million valuation
Investors: Celesta Capital, Mayfield, among others
Founded in 2022 by Rajiv Khemani (whose previous startup iInnovium was acquired by Marvell for $1.1 billion), Auradine is an infrastructure solutions provider developing cutting-edge technologies in energy-efficient silicon, privacy, zero-knowledge proofs, and AI.
8. Chain Reaction: $70 million Series C
Investors: Morgan Creek Digital, Hanaco Ventures, among others
Chain Reaction is a blockchain chip startup designing the future of disruptive blockchain and privacy technologies. Partnering with cloud providers and data centers, it uses custom ASICs and system redesigns to optimize energy-efficient, high-performance computing. Its purpose-built solutions aim to enable secure, scalable, green computing to protect humanity, privacy, and the planet.
9. Taurus: $65 million Series B
Investors: Credit Suisse, Arab Bank Switzerland, among others
Taurus provides enterprise-grade infrastructure for issuing, custodizing, and trading any digital asset—including staking, tokenized assets, and digital securities. It also operates a regulated private market for tokenized securities. The new funding will accelerate development of its digital asset platform and international expansion.
10. QuickNode: $60 million Series B at $800 million valuation
Investors: 10T Holdings, LLC, Tiger Global, among others
QuickNode is a Web3 infrastructure platform helping developers and enterprises build, launch, and scale blockchain-based dApps. Since 2017, it has partnered with hundreds of thousands of top developers and companies to grow the DApp ecosystem. This round will fuel global expansion and empower builders toward a decentralized, interconnected future.
11. Unchained Capital: $60 million Series B
Investors: Valor Equity Partners, NYDIG
Unchained Capital is a Bitcoin-native financial services firm offering collaborative custody, trading desks, Bitcoin-backed loans, and Bitcoin retirement accounts. The company claims to safeguard over $2 billion worth of Bitcoin via thousands of keys.
12. EOS: $60 million funding
Investor: DWF
DWF Labs supported the EOS network through a $45 million EOS token purchase agreement and a $15 million investment commitment to fund EOS-based businesses and projects, aiming to accelerate EOS network growth and adoption.
12. Magic: $52 million strategic funding
Investors: PayPal Ventures, Cherubic, Synchron, among others
Magic provides non-custodial wallet infrastructure for enterprise clients, enabling secure onboarding of users into the Web3 ecosystem. It offers end-to-end Web3 onboarding features including authentication, fiat onramps, NFT minting, and checkout. Trusted by leading brands in both Web2 and Web3 like Mattel, Macy’s, Xsolla, and Immutable, Magic has created over 20 million wallets used by more than 130,000 developers.
13. EigenLayer: $50 million Series A at $500 million valuation
Investors: Blockchain Capital, Coinbase Ventures, Polychain Capital, among others
EigenLayer is a re-staking protocol built on Ethereum. Ethereum validators can use EigenLayer to re-stake their ETH and earn additional yield. Externally, it allows users to stake ETH, LSD-ETH, and LP tokens on other public chains, oracles, and middleware as nodes to receive validation rewards.
Summary
The above covers the crypto investment landscape in the first half of 2023. Large funding rounds were primarily concentrated in foundational protocols. Notably absent were major raises in DeFi, NFTs, or gaming—likely reflecting differences in market cap potential across sectors.
Recently, many have criticized institutional investments, noting that “institutional tokens” often come with high valuations and low circulating supply, peaking at launch while retail investors end up holding the bag. Institutions are accused of mass-producing projects only to dump them on retail. Amid frustration, some investors have turned to meme coins and other so-called “dog” projects.
Take Sui, recently dubbed the “crowdfunding platform”—after mainnet launch, 58.88 million SUI tokens were released, causing sustained selling pressure and continuous price decline, leaving investors unwilling to buy the dip. So, if new institutional tokens launch, will you still participate—or stick with blue-chip assets like Bitcoin and Ethereum? Feel free to comment and share your thoughts.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
白话区块链
