Web3 Investment Jump 55% in Q1 as VC Confidence Returns to Sector

by

In the first quarter of the year, there was a notable jump of 55% in the overall investment expenditure for Web3 projects. This significant rise indicates a renewed enthusiasm among venture capitalists and other entities towards cryptocurrencies, blockchain technology, and the broader Web3 landscape.

Based on the findings from the Q1 2024 OnChain Report by QuickNode and Artemis, the amount invested in Web3 projects experienced a significant increase of 55% compared to the previous quarter’s reported figures. Furthermore, there was a notable rise of 36% in the number of Web3 investment deals when compared to the previous quarter. These statistics suggest a noticeable uptick in venture capital confidence and investment activity within the Web3 sector.

AI Saw More Web3 Investments than Others in Q1

Among all types of investments, the growth in seed round transactions was the most significant, with a 53% increase from one quarter to the next. This surge suggests that investors are increasingly interested in backing early-stage companies. According to the report, Seed and Series A funding rounds saw nearly double the amount raised during the transition from Q4 2023 to Q1 2024.

The Q1 OnChain Report identified artificial intelligence (AI) as a standout category, with significant investment and attention drawn to it. Companies have been eagerly investigating AI’s potential uses and applications as a pioneer in the Web3 space. In contrast, categories such as trading and developer tools saw only modest investment increases. This could be attributed to decreased investor enthusiasm or a lack of interest due to uncertainties or lower prospects for quick profits.

In the first three months of 2024, venture capital funding for Web3 projects not only bounced back but also showed a clear trend toward sectors with the potential for major impact and innovation within the blockchain industry. This quarter marked an important turning point, signaling a heightened level of investment and strategic focus in Web3 technologies, further strengthening its position in the larger technological landscape.

The QuickNode and Artemis report revealed significant developments in Web3 stories during Q1, as indicated in their findings. For example, there was a substantial 42% rise in stablecoin usage activity mentioned in the report. Factors contributing to this growth include the anticipated launch of a Bitcoin spot ETF, the revival of decentralized finance (DeFi), and the emergence of spot Bitcoin ETFs. Stablecoins have consistently had the highest number of daily active addresses over the past five quarters. Specifically, they accounted for over 41% of all daily active addresses in Q1, demonstrating their crucial role as the foundation for value transfer on the blockchain.

More on DeFi and Gaming

According to the report, there was a remarkable 291% rise in user activity on Decentralized Finance (DeFi) platforms quarter over quarter, despite regulatory scrutiny from the SEC. The final quarter saw daily DeFi transaction volume soaring past previous highs of stablecoin transactions, reaching an impressive 7 million. Notably, all leading DeFi sectors such as derivatives, bridges, yield farming, lending, and liquid staking recorded a doubling or tripling of their total value locked within the quarter.

The quarterly increase of 155% in active Web3 gaming addresses suggests a strong capacity for user attraction and retention within this sector. Moreover, there is a surge in the adoption of decentralized social platforms due to their enhanced data control features and potential profit-sharing opportunities. According to the OnChain report, these platforms experienced a remarkable 425% growth in quarterly total value locked (DAA).

Read More

2024-04-17 18:57