Friday, March 24, 2023

CoinGecko: Crypto Funding Shifts from CeFi to DeFi After Major Industry Crash

Digital assets will invest a solid $2.7 billion in decentralized financial projects in 2022, 190% more than in 2021, while investment in centralized financial projects went the other way, falling 73% to $4.3 billion in the same period.

Wanderers in DeFi funding are rising despite global cryptocurrency funding numbers falling from $31.92 billion in 2021 to $18.25 billion in 2022, as the market turns from bullish to bearish.

According to a March report by CoinGecko, citing data from DefiLlama, the numbers “show the potential for DeFi as a new high-growth area for the crypto industry.” The report says the decrease in funding for CeFi could mean the sector is “reaching a level of saturation”.

Supply of financing by sector in the cryptocurrency market between 2018-2022. Source: CoinGecko

The growth of money in DeFi, which has almost tripled, is also a staggering 65-fold by 2020, at the start of the last bull market.

According to CoinGecko, the largest DeFi funding in 2022 came from the $1 billion Lunar Foundation’s (LFG) sale of LUNA tokens in February 2022, which came nearly three months before the Earth’s disastrous fall to the Moon. ) in May.

Native Ethereum decentralized exchange (DEX) Uniswap and Ethereum protocol Lido Money put $164 million and $94 million, respectively.

Meanwhile, FTX and FTX US are the biggest recipients of CeFi funding, they raised $800 million in January, representing 18.6% of CeFi funding in 2022 alone, but the exchanges went belly up only 10 months later and declared bankruptcy.

Other areas of investment were blockchain infrastructure and blockchain technology companies, which raised $2.8 billion and $2.7 billion, respectively, a trend that has remained strong over the past five years, CoinGecko said.

Henrik Andersson, chief investment officer at Australia-based fund manager Apollo Crypto, says his company is looking at four specific areas within cryptocurrency recently:

The first is “NFTfi”, which he said comes from the combination of DeFi and NFT. These are NFT projects that use DeFi to apply various business methods such as passive income or long-term or short-term NFT trading projects, among others.

The second and third are on-chain derivative platforms and decentralized stalls, which Andersson believes have arisen due to the collapse of FTX and recent regulatory moves;

“In light of the FTX debacle and regulatory moves, we have seen renewed interest in derivatives platforms on chains such as GMX, SNX, LYRA. Decentralized stablecoins such as LUSD/LQTY have also benefited from the regulatory environment.”

The fourth key point cited by Andersson is layer 2 networks based on Ethereum. “2023 will be the year of L2 and specifically Ethereum-based L2,” he said.

The chief investment officer explained that Jack 2 tokens like Optimism (OP) have done well recently, especially in light of the release of the “Base” token, created by Coinbase and made by Optimism.

GMX, SNX, LYRA, LQTY, OP investments of Apollo Crypto.

Last month, cryptocurrency analyst Miles Deutscher predicted on a 19 Feb. He tweeted to his 301,700 followers that anonymous tokens, liquid derivative tokens, artificial intelligence (AI) tokens, DEX perpetual tokens, “real yield” tokens, GambleFi tokens, decentralized staking, and Chinese coins were all doing well in 2013;

However, VC funding in the cryptocurrency sector has declined for three consecutive quarters amid difficult market conditions.

Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here is not intended to be used as financial advice or investment recommendations. All investment and commercial moves involve risks and it is the responsibility of each person to do their own research before making an investment decision.

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Nation World News Desk
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