Digital asset investment firms poured $2.7 billion into decentralized finance (DeFi) projects in 2022, up 190% from 2021, while investments in centralized finance projects (CeFi) did the opposite — down 73% to $4.3 billion.
This is a staggering increase in DeFi funding, even though the overall cryptocurrency funding figure has dropped from $31.92 billion in 2021 to $18.25 billion in 2022 as the market shifted from bullish to bearish.
According to a March 1 report by CoinGecko, which cites data from DefiLlama, these indicators “could indicate that DeFi is a new high-growth area of the crypto industry.” reaching saturation levels”.
Funding volume in various sectors of the cryptocurrency market 2018-2022. Source: CoinGecko
DeFi investments have nearly tripled in 2022, while also marking a staggering 65-fold increase in 2020 at the start of the recent bull market.
According to CoinGecko, the largest DeFi funding of 2022 will come from Luna Foundation Guard (LFG)’s $1 billion LUNA token sale in February 2022, roughly three months before Terra’s catastrophic demise. Luna Classic (LUNC) and TerraClassicUSD (USTC) possible.
Ethereum Origin decentralized exchange (DEX), Uniswap and Ethereum blockchain protocol Lido Finance have raised $164 million and $94 million, respectively.
Meanwhile, FTX and FTX US are the largest recipients of CeFi funding, raising $800 million in January—accounting for 18.6% of all CeFi funding in 2022 alone. However, the cryptocurrency exchange collapsed and filed for bankruptcy after only 10 months.
Other areas of investment, including blockchain infrastructure and blockchain technology companies, raised $2.8 billion and $2.7 billion, respectively — a trend that has continued strong over the past five years, according to CoinGecko.
Henrik Andersson, chief investment officer at Australian asset manager Apollo Crypto, said his firm is currently researching four specific areas of cryptocurrency:
The first one is “NFTfi”, which he said is the result of the combination of DeFi and NFT. These are NFT projects that use DeFi to implement various trading strategies to earn passive income, or NFT projects that take long or short trades, etc.
I have not purchased any NFTFI tokens
just waiting @nftperp Start token.
Any perpetual derivative outperforms other categories
text launch pic.twitter.com/yaW6HNkIGN
— DeFI Saint (@TheDeFISaint) February 17, 2023
Second and third are on-chain derivatives platforms and decentralized stablecoins, which Andersson attributes to the FTX debacle and recent regulatory actions:
“Given the FTX debacle and regulatory moves, we’re seeing renewed interest in on-chain derivatives platforms like GMX, SNX, and LYRA. All seeing record volume/TVL. Decentralized stablecoins like LUSD/LQTY Coins also benefit from the current regulatory environment.”
back @LiquityProtocol The listing on Binance, coupled with the SEC’s recent narrative on centralized stablecoins, has already attracted some attention.
Let’s take a look at the TOP 15 decentralized stablecoins pic.twitter.com/XWJvWpaT4l
— HC – Capital (@hc_capital) March 5, 2023
The fourth vertical that Andersson cites is layer 2 networking based on Ethereum. “2023 is considered the L2 year, especially Ethereum L2,” he emphasized.
The investment director explained that layer 2 tokens like Optimism (OP) have performed well lately, especially with the launch of the “Base” testnet — a layer 2 network created by and powered by Coinbase . Powered by Optimism.
GMX, SNX, LYRA, LQTY, and OP are all Apollo Crypto investments.
Last month, cryptocurrency analyst Miles Deutscher predicted in a Feb. 19 tweet that zero-knowledge rollup tokens, liquid collateralized derivatives, artificial intelligence (AI) tokens, perpetual DEX tokens, “real returns” Tokens, GambleFi Tokens, Decentralized Stablecoins and China Tokens will do well in 2023 due to the large amount of money.
However, venture capital investment in the crypto space has declined for the past three consecutive quarters amid tough market conditions.
- Thanks to a promotional video from Huawei, this Defi token suddenly jumped 500%
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As reported by Cointelegraph