Category-Specific analysis

2023-03-02 02:39:45 UTC
This section will dive deeper into every category to inspect the available dataset through a category-specific lens.

Crypto Financial Services (CFS)


237 of the 549 projects under the CFS category belong to North America. Oceania is home to only nine projects classified under CFS.

49% of the total deals raised are at the Pre-Seed or Seed levels. The highest number of maturation phase funding deals belongs to the CFS category.

We can infer that CFS as a category has matured over the years, as 82% of the total investment belongs to the Early, Mid, and Later Stage deals and Growth Equity.

The highest amount raised in a single round in the digital asset sector was by a CFS company, NYDIG, which delivers bitcoin products across industries, from banking and insurance to fintech and nonprofits. NYDIG raised $1 billion in a growth equity round. Circle, a payment services company that developed USDC, raised an aggregate of $840 million in two growth equity rounds. As of this writing, USDC controls 31% of the total stablecoin supply. 

Payment/Payment services and Security Tokenization remained the most attractive subcategories for investors as they correspond to 49% of the total deals under CFS.


The Active Continents correspond to 92% of the total Infrastructure projects, whereas Developing Continents contribute to only 3% of the Infrastructure projects.

Iris Energy, an Australia-based sustainable bitcoin mining company with accessible amounts of under-utilized renewable energy, raised $25 million. It was the highest amount raised by a company not situated in the Active Continents. 120 other capital raises from Active Continents in the Infrastructure category garnered more funds than Iris Energy.

This fact corroborates our previous hypotheses that there is a drastic difference in development between Developing Continents and Active Continents. Moreover, the investments in Infrastructure are most disproportionate and heavily skewed toward Active Continents.

48% of the total deals that occurred were executed at Pre-Seed and Seed & Pre-Series A level. Interestingly, $4.5 billion were raised in Token Sales, the highest dollar amount raised in Token Sales by a category. However, TON Blockchain and Polygon's token raises correspond to roughly $2.15 billion.

Among the projects under Infrastructure, Mining/Staking Infra and Layer 1 subcategories attracted the most finances until 2019.The investments are relatively more distributed from 2020 onwards.

The rise of scaling solutions for Ethereum and other L1s


Since its inception, Ethereum has spearheaded the decentralized finance sector. As user adoption for Ethereum increased exponentially in 2019-2020, transaction costs skyrocketed. Ethereum's protocol design limits the number of transactions it can process to just 15 per second, but the number of transactions submitted on the blockchain was much higher. U sers paid as high as $200 to execute transactions. This rendered retail market participants unfit to interact with Ethereum and gave rise to other Layer 1 smart contracts and scaling solutions for Ethereum. Scaling solutions offer increased transaction speed and higher transaction throughput without sacrificing the decentralization or security of the Ethereum base layer.

The exorbitant gas price of Ethereum led to a supply-demand gap that made retail investors exercise other alternative blockchains. Until early 2020, 94% of the Total Value Locked (TVL) was concentrated on Ethereum. As of this writing, the TVL is more distributed as 57% of the TVL belongs to the Ethereum blockchain, and the rest is divided amongst Tron, BNB Chain, Avalanche, Solana, etc.

Subcategories like Layer 1, R&D, and Bridge/Interoperability, which work towards developing a more frictionless end-user experience, have consistently garnered more interest YoY since 2020.

Lithosphere, an AI-powered platform-level public chain aiming to connect all tokens and create a layer of management across all blockchains, raised $400 million in a commitment round led by GEM Digital. L-1s like Near, Solana, Ava Labs, and Aptos raised more than $200 million each to develop their respective smart contracts.

Capital injections in R&D have been steadily increasing for the last three years. The amount raised by projects under the R&D subcategory grew from $50 million to $1.4 billion in the respective years of 2020 and 2022. Consensys, an R&D company that offers services ranging from consulting to developing turn-key blockchain-based projects, has raised $715 million since 2021.

Polygon, Optimism, Offchain Labs, and Starkware are some notable R&D companies building scaling solutions that have collectively raised nearly a billion dollars. All these raises sprung up in the last two years to attract users and developers since the Ethereum base layer was unfit for daily transactions.



The second most funded projects after the NFTs/Gaming belong to the DeFi category. North America dominates the category, as 45% of the projects that attracted investments are headquartered in it. The United States and Singapore are home to 286 projects out of 694.

The DeFi category has raised a massive amount in Token Sales, contributing 40% of the total amount infused in the DeFi projects. However, this inference is heavily influenced by a single Token Sale conducted by Terra. Terra's Luna Foundation Guard aimed to build a UST Forex Reserve denominated in Bitcoin by raising $1 billion from Jump Capital and 3 Arrows Capital.


DeFi projects attracted a maximum number of investments compared to other categories between Q3 2020 and Q2 2021 following DeFi summer. Although DeFi contributed to a considerable 14.4% of the total deals in the digital asset sector, it only corresponds to 8.2% of the total amount raised. This is because most deals in DeFi have come at the Seed level. Of the 875 deals raised, 63% of the deals occurred at Seed & Pre Series A level.

One possible explanation is the relatively low overhead to launch a DeFi protocol compared to other types of companies. The entire product is software-based, and the team is usually small. In theory, if a DeFi protocol is successful, it will be decentralized over time, and the need for external capital injection will taper off.

Only 6 DeFi projects have raised Mid or Later stage funding rounds. DYDX, a derivatives exchange, is the only DeFi protocol that has raised a Later Stage funding round. The round was led by Paradigm, CMS holding, HashKey Capital, and others.


NFTs/Gaming is the most flamboyant category in the sector, as celebrities across industries have indulged in it. Non Fungible Tokens, on a high level, are digital asset ownership certificates but are often pigeonholed as "just pixelated JPEGs."

North America is home to 39% of the total NFTs/Gaming projects. 330 out of 1,061 projects are headquartered in Asia.


Asia has witnessed a massive boom in NFTs/Gaming since 2021, as the number of new projects founded in 2021 increased by 400% YoY. For the same year, the total amount raised YOY grew by an astonishing 9242%.The rise of Axie Infinity, a play-to-earn blockchain game, kickstarted the NFT Mania in Asia and the rest of the world as the token value rose from $0.25 to $165 in the first half of 2021.

India has a population of 1.3 billion, and the game of cricket is followed religiously in the country. In an attempt to capitalize on the NFT bandwagon, investors were willing to bet on this untapped market, as two of the three most prominent digital NFT card collectible investments in the blockchain sector revolve around Cricket. Ratio, being built on Polygon, has raised $120 million, and Fancraze, built on Flow blockchain, has raised $117 million. It is safe to speculate that these projects will target Indian markets, as 90% of Cricket's entire fanbase is from the Indian subcontinent.

Although NFTs/Gaming has only had one bull cycle as of this writing, it has already raised $13.7 billion since 2017. Its funding dynamics are evolving at a brisk pace as it gained traction in 2021.

NFT space witnessed a trading volume of $33 million in 2020. In 2021, the total value traded was $13 billion, a staggering 42988% increase in trading volume YoY. The NFT mania from the second half of 2021 onwards saw the historic $29 million sale of Beeple's 1/1 artwork 'HUMAN ONE,' a $24 million purchase of Cryptopunk #5822 by Deepak Thapliyal, CEO of Chain, $3.4 million gold fur Bored Ape sale, etc.


NFTs/Gaming attracted funds at an unprecedented rate since NFT Mania began in Q3 2021. The category witnessed a 562% growth in the recent five quarters over the previous 16 quarters.

The NFTs/Gaming category raised the highest number of Seed & Pre-Series A rounds. 30% of all the Seed & Pre-Series A deals correspond to NFTs/Gaming.


Except for Trading/Brokerage, the number of projects for other categories in North America is significantly higher than in other continents.

Asia and North America are home to 31% of the total projects each. 32% of the firms in Asia are located in Singapore, as the Monetary Authority of Singapore has had a  favorable licensing framework for crypto companies.


In Asia, exchanges like Coinswitch Kuber and CoinDCX from India, Pintu from Indonesia, and Matrixprot - a Singapore-based brokerage firm, have raised Mid or Later stage deals. These exchanges have developed consumer-centric products and services, creating a conducive environment for retail and institutional traders. Asian markets accounted for 43 percent of global cryptocurrency activity between June 2020 and June 2021, with $296 billion in transactions.

74% of the total amount raised and 30% of the total deal count for this category belong to maturation phase funding deals.

Binance, a centralized exchange, controls the spot markets, facilitating 67%of the total trading volume in 2021. Binance has expanded rapidly in Asian markets. Binance acquired an 18% stake in Singapore's securities exchange Hg Exchange. It intends to reestablish its presence in Thailand, having partnered with Gulf Energy Development PCL. In December 2021, Binance joined  a new crypto hub established by the Dubai World Trade Centre Authority  to assist crypto service providers in becoming licensed in the United Arab Emirates. The  American counterpart of Binance raised $200 million in 2022 to expand further.

However, FTX, a trading service platform more focused on derivative products, had benefitted the most from investors' insatiable appetites before they became insolvent. FTX has acquired $1.8 billion of investments. FTX has expanded its global presence over the last three years. The company was valued at $32 billion at the start of the year, only to declar bankruptcy in November 2022.

FTX and Alameda Research shutting down is arguably the black swan event which may have caused the industry a setback for a few quarters.


This category has seen a change in fortune in the last couple of years. It saw a 230% rise in 2018 during the ICO boom, only to plunge the following year by 59% in terms of the amount raised.

Data Storage and Social Networks are the leading subcategories, as they contribute 57% of the total amount raised by the category.

61% of the total amount is attributed to the Pre-Seed and Seed & Pre-Series A level.Web3 has recorded only 2 Later Stage deals, which conveys the scope for growth in this category.

45% of the projects in the Web3 category belong to North America. 
Africa, Oceania, and South America contribute to less than 9% of the projects classified under Web3.

Helium, a peer-to-peer wireless infrastructure that provides connectivity for the Internet of Things (IoT) devices powered by the Helium blockchain, has raised $326 million from a16z, Tiger Global, Multicoin Capital, etc., which involves two later-stage deals.

Web3 will flourish in a developed infrastructure that allows a multichain presence of a protocol, interoperability of tokens with various blockchains, and cross-chain bridging of assets. Such infrastructure was relatively underdeveloped in 2018-2019. Cross-chain protocols like Axelar and DeBridge are trying to establish this infrastructure layer. They are decentralized network and tool providers that help to connect dApp builders with multiple blockchain ecosystems, applications, and users for frictionless cross-chain communication.

In the last three years, the amount infused and deal count have increased steadily every year.

Data/Analytics/Information (DAI)

29% of the total amount raised was attributed to Later Stage deals. Four out of these six Later Stage deals were attributed to Chainalysis.

Chainalysis, a blockchain analytics & surveillance company that helps government and private agencies to analyze cryptocurrencies for compliance, education, and investigation, dominates the funding landscape for the category. Chainalysis has raised $535 million, 27% of the total amount raised by the projects in this category.

Interestingly, this is the highest % contribution by a single entity to the capital injection into its category.

48% of the total deals raised fall under the Market Data/Analytics subcategory. However, it only contributes $570 million out of the $1.9 billion raised by DAI. The Chain Analytics/Compliance subcategory contributed to only 30% of the deals but has raised an impressive 59% of the total.

Nansen, TRM Labs, Elliptic, and Solidus Labs are a few of the other noticeable companies classified under Chain Analytics/Compliance that have raised more than $80 million each.


The Block Research did not observe any South American or Oceanian projects classified under this category.


It is the only category of projects which raised more deals during 2017-2019 compared to 2020-2022. During 2017-2019, companies wanted to utilize permisssioned private blockchains as the 'Blockchain, not Bitcoin' narrative picked up the pace. Back then, It was a trend to bring out utility tokens and include the 'blockchain' buzzword in the business model, which led to a significant uptick in investments. 60% of the deals were raised in the 2017-2019 period.

88 Early Stage deals contribute to 33% of the total amount raised corresponding to Enterprise. This category corresponds to the highest count of Pre-Seed deals. 53% of the deals have occurred in Pre-Seed and Seed & Pre-Series A rounds.

According to The Block Research's database, 176 projects are located in North America, and Asia corresponds to 171.

Out of the $4.2 billion raised by the Enterprise category, Distributed Ledger Technology projects have raised $2.3 billion. Two of the most significant raises in the Enterprise category are attributed to DLT projects that raised money after the 2017 bull run. OneConnect, a fintech solutions provider in China, raised $650 million in a Series A round. Hyperchain, a Chinese company that develops enterprise-grade solutions based on its Hyperchain blockchain platform, raised $234 million in a Series B round.

A peculiar trend regarding Chinese projects' contribution to the Enterprise category is observed. The enterprise category in total has raised $4.1 billion, and China is the highest  contributing nation along with the United States, as both contributed $1.3 billion. 50% of the total investment in China has occurred in the Enterprise category.