Blockchain-Specific Analysis

This section will dive deeper into investment trends in various blockchain ecosystems. DeFi and NFTs/Gaming are the categories we will consider since the rest contain low on-chain user activity, private blockchains, or centralized conglomerates. Consequently, all the inferences are drawn based on data from the projects belonging to these two categories.

 

The identity of the blockchain is irrelevant to some projects. These projects are considered under the 'Agnostic' label. Game studios, NFT platform infrastructure developers, etc., may be classified as Agnostic.

 

There will be certain protocols for whom blockchain will be unverifiable. Blockchain games, NFT arts, collectibles, decentralized exchanges, etc., may fall under the 'Unverifiable' label.

 

2282 projects have raised money since 2017 totaling $18 billion. Since the monumental DeFi summer, the decentralized financial applications gained some user confidence, further percolating into blockchain gaming and NFT projects. The infamous rise in gas fees caused more and more applications to consider other smart contracts as their base layer. Blockchains like Solana, BNB Chain, Polygon, Avalanche, etc, are being considered by newer projects.

However, the future seems to be multichain with improving infrastructure for asset interoperability. In the last two years, Multichain projects have raised the highest number of deals, dethroning Ethereum.

According to HashKey Capital, projects are also considering deploying in multiple chains in order to capture users and liquidity from those chains. Out of the top 100 DeFi projects by TVL, 41 of them are multi-chain.

 

 

Since 2021, Multichain projects also led the way regarding the total amount raised. 92% of the total multi-chain investments have occurred since 2021. In 2022, Polygon, Solana, Flow, and ImmutableX have also gained momentum since the 2020 bull run.

 

In 2020, multi-chain investments in NFTs/Gaming rose by 6% YoY, but DeFi observed a 393% growth as investments grew from $25.4 million to $98.4 million, courtesy of the DeFi Summer.

Protocols that offer some incentive to bridge assets from one blockchain to another pulled user engagement and, consequently, investments. DEXes and Derivatives protocols with interoperability mechanisms offering financial applications for wrapped tokens attracted more investment in DeFi than other subcategories.

 

Similarly, protocols related to blockchain gaming which may prefer a multi-chain presence, have raised significantly more investments than other subcategories. Such protocols may prefer a multi-chain presence for various reasons like increasing adoption, token economics management, separating in-game transactions from the main chain to improve scalability and affordability for users, etc.

 

Even though Ethereum has gathered criticism over the last few months, it remains the most preferred blockchain compared to other alternatives. Ethereum accounts for 371 projects, 473 funding deals, and $4 billion in investments, which is significantly ahead of the second best: Solana's tally of 152 projects, 178 deals, and $1.1 billion of capital injection.

 

Ethereum maintains its dominance over DeFi and NFTs/Gaming, as 57% of the Total value locked is on Ethereum. Applications like Uniswap, 1inch, and Opensea still dominate their respective domains' trading volumes and will require serious competition to be bested any time soon. It is worth mentioning that some of the notable multichain protocols, like 1inch, Dapper Labs, Opensea, etc., initially illustrated success on Ethereum and later on made their way to other blockchains.

 

Sorare, an Ethereum-based fantasy soccer game with 215 licensed clubs where player cards are collectible, limited, and tradeable NFT, raised $738 million combined in multiple rounds, making it the highest investment for an on-chain protocol.

 

In 2022, Polygon has raised 630% more capital compared to 2021. Out of the $575 million raised by Polygon projects in 2022, Autograph and Rario contribute ~$290 million. Autograph, an NFT platform that brings iconic brands and legendary personalities in sports, entertainment, and culture, to create unique digital collections and experiences, raised $170 million in a series B led by a16z. Rario, an NFT platform centered specifically around cricket that enables its fans to buy and trade officially licensed cricket athlete NFT cards, also raised $120 million from Dream Capital.

 

Leaders of their respective industries, like Meta, Stripe, Starbucks, and Robinhood, have chosen Polygon as their Web3 partner to build Web3 experiences. Polygon is also one of six companies selected to participate in Disney's 2022 Accelerator program. Along with the organizational and  business development efforts, Polygon continues to invest in building roll-up technologies such as zero-knowledge rollups, which help process transactions separately from the leading network to help increase speed and lower costs.The future is Multichain, and as of now, Polygon seems  to be leading the way.

 

As NFT adoption skyrocketed in 2021, Flow Blockchain has garnered significant interest in the last two years. Instagram, a social media colossal, has added support for Flow-based NFTs as it expands its NFT initiative into more than 100 countries. Interestingly, Flow is also the most carbon-efficient major blockchain. Based on 2021 usage, Flow uses just 0.18 GWh annually. Based on Deloitte's research, minting an NFT on Flow consumes even less energy than a single Google search, and driving one mile in a car is equivalent to minting one million Flow NFTs.

 

Another project centered around cricket, FanCraze, a digital cricket collectible cards game, is being built on Flow Blockchain, which raised $117 million. A VR/metaverse heavyweight that builds digital avatars for social media, Genies is also built on Flow blockchain. Genies has raised $215 million.

 

The most talked about 'Ethereum Killer,' Solana, has seen a stupendous rise in the last two years. The Launch of Serum, a central limit order book based exchange on Solana, which also was the biggest investment of FTX, was the catalyst for the rise of Solana. Solana became the go-to blockchain for developers and retail users as Ethereum struggled to scale during 2021. It claims to have the capacity to support around 65,000 transactions per second (TPS), average transaction costs under $0.001, and 3400 validating nodes across six continents across the globe.

As blockchain games were on the rise in 2021, play-to-earn games required high volume, low-value in-game transactions, and Solana offered the scalability this category of protocols desired. As the Solana token geared up for one of the most outrageous price actions in the  history of blockchain, Solana Labs, the organization building the Solana blockchain, raised $314 million in one of the most significant token sales as of yet.

 

Solana-based projects raised more than a billion dollars in the last two years after having raised a mere $7 million until 2020. Unlike Polygon, which focused heavily on the development of NFTs/Gaming projects, capital on Solana is distributed, as 44% of investment went into DeFi  protocols and 56% of investment corresponded to NFTs/Gaming protocols.

 

Another blockchain worth mentioning is the one with the third highest TVL in the DeFi realms. BNB Chain, with a $5.3 billion TVL, is home to 115 projects which have raised ~$330 million as of this writing. 75% of the total investment in the BNB chain went into NFTs/Gaming projects. PancakeSwap, a decentralized exchange on the BNB chain, is the most popular DeFi app across  all blockchains, with 1.4 million unique active addresses and a trading volume of $4.7 billion in the last month. It raised $0.35 million in a Pre-Seed Accelerator program from Binance Labs.