2021 Cryptocurrency Industry Investment and Financing Review: Total Financing Reached $30.27 Billion, with Gaming Projects Securing the Most Funding

Author: Footprint

2021 Blockchain Financing Overview

Number and Amount of Financing

Data shows that in 2021, the blockchain industry's financing market was very active, with capital flowing into the blockchain field at an unprecedented speed, a trend that became more pronounced after March.

2021 Monthly Investment Trends

Looking at blockchain financing in 2021, we can summarize the following characteristics:

• Rapid growth in capital investment
• More segmented investment areas
• Short financing cycles
• A significant increase in the number of seed round financing projects

In this article, Footprint Analytics analyzes the financing distribution across industries, overall financing rounds, investment institutions, etc., to present a comprehensive view of global blockchain industry financing and provide industry references.

According to Footprint Analytics, the overall financing situation in 2021 showed an upward trend, with a total of 1,045 financing events throughout the year, a 525% increase compared to 167 financing events in 2020.

In 2021, thousands of financing events created a total financing amount of $30.27 billion, a 790% increase compared to $3.4 billion in 2020.

Compared to 2020, where DeFi and CeFi were the main financing areas, the investment amounts across various fields indicate that in 2021, capital still favored the well-structured and mature CeFi sector, followed by the NFT sector and infrastructure.

Industry Layout

From the distribution of financing industries, in 2021, the DeFi industry remained a key investment area for capital, accounting for over 30% of DeFi-related industries. 19% was related to NFTs, and 17% was for infrastructure. Additionally, other segmented fields also emerged.

2021 Financing Project Types (based on TVL)

2020 Financing Project Types (based on TVL)

Compared to 2020, where the distribution was more concentrated in DeFi, CeFi, and infrastructure, it is evident that the blockchain world in 2021 has greatly diversified.

Financing Rounds

In terms of financing rounds, seed round financing accounted for more than half, followed by A round financing and strategic financing, which held an absolute advantage.

2021 Financing Rounds

In the financing rounds of 2021, seed round financing accounted for 61.9%, while A round financing accounted for 15.9%. This indicates that the blockchain sector is still in its early development stage, with various new projects frequently appearing in people's view. The blockchain field is one that updates and iterates rapidly, and many star projects only began to rise this year. Unlike traditional industries, which have financing cycles measured in years, the financing speed in the blockchain industry is much faster.

Strategic financing in the blockchain field accounted for 13.5% of total financing, characterized by large amounts, long holding periods, and participation in corporate governance. This indicates that blockchain investment firms are relatively mature and will provide certain support to startups to help them grow stronger.

However, there are very few projects that have reached B round financing or above. Currently, most companies entering B round financing are distributed in the relatively stable DeFi and CeFi sectors. Projects need strong vitality to develop rapidly.

Financing Institutions

Among financing institutions, AU21 ranked first, with a total of 119 investments throughout 2021. Coinbase and NGC followed closely, with 102 and 91 investments, respectively.

From the table, it can be seen that AU21's investment quantity is far ahead. AU21 Capital is a blockchain venture capital firm based in San Francisco, which began to ramp up its efforts in June, primarily focusing on DeFi, while also paying significant attention to the NFT sector, with investments concentrated in seed rounds.

Coinbase Ventures is one of the most active venture capital firms in the cryptocurrency field and is one of the few investment firms with over a hundred investments, primarily focusing on infrastructure and DeFi.

NGC Ventures, initiated by key members of the NEO community and seasoned investors from traditional capital markets, also primarily focuses on DeFi and infrastructure.

It appears that the investment portfolios of leading investment institutions are mainly conservative, primarily in DeFi and blockchain infrastructure, with some involvement in NFTs, but relatively little engagement in other emerging fields like Web 3.

2021 Blockchain Financing Analysis by Sector

This article will analyze five sectors from three perspectives: amount, rounds, and projects.

Annual Top Three:

• CeFi sector had the highest total financing amount
• DeFi sector attracted the most investors
• The largest financing project of the year occurred in the DeFi sector

CeFi Sector Financing Situation

CeFi refers to projects that utilize blockchain technology or provide services for blockchain projects but do not fully decentralize. They usually have a relatively complete system and strong capital backing.

CeFi Financing Amount

In 2021, the total investment in the DeFi sector was $14.5 billion, significantly outpacing other sectors. The highest monthly amount was $2.4 billion in November, indicating increasing trust in stable, well-structured CeFi services.

CeFi Financing Rounds

In terms of financing rounds, compared to the overall 61.9% seed round financing in the blockchain sector, the financing process in the CeFi sector is clearly ahead, with A round financing and seed round financing being roughly equal in number.

In terms of projects, stock brokerage firm Robinhood, exchange FTX, and application service platform Revolut are the top three.

DeFi Sector Financing Situation

DeFi is the central field of blockchain development, known in Chinese as "开放式金融" (Open Finance), which best embodies the open, equal, and decentralized spirit of blockchain.

DeFi Financing Amount

In 2021, the total investment in the DeFi sector was $2.77 billion, with monthly amounts exceeding $100 million in 11 out of 12 months, with March, June, and December being particularly notable for their financing amounts.

DeFi Financing Rounds

In terms of financing rounds, seed rounds still dominate, which is closely related to the rapid emergence of innovative projects in the DeFi sector and the fast pace of technological updates and iterations.

In terms of projects, the top three DeFi projects by financing amount are decentralized autonomous organization BitDAO, asset trading platform FalconX, and decentralized aggregator exchange 1inch.

NFT Sector Financing Situation

NFTs are unique digital collectibles minted on the blockchain. In 2021, NFTs became the top trending word in the Collins Dictionary, and the related metaverse also made the list.

NFT Financing Amount

Dubbed the "Year of NFTs," the total financing amount for NFTs in 2021 was $3.51 billion, showing significant growth compared to 2020. From the monthly financing amounts, after the mid-year NFT boom, September was a particularly rapid financing month for NFT projects.

NFT Financing Rounds

In terms of financing rounds, due to the short history of NFTs, seed round financing accounts for the vast majority, making us even more eager to see the future vitality of the NFT sector, hoping it can bring us more surprises.

From the project perspective, NFT platforms Sorare, blockchain gaming company Dapper Labs, and NFT game Zepeto performed particularly well.

Infrastructure Financing Overview

Infrastructure is crucial in the blockchain field, and in 2021, with frequent security vulnerabilities, people paid more attention to infrastructure than ever before.

Infrastructure Financing Amount

In the infrastructure sector, the total financing amount was $7.28 billion, with the highest monthly total reaching $1.3 billion in June.

Infrastructure Financing Rounds

In terms of financing rounds, seed rounds and A rounds still dominate. Currently, blockchain infrastructure is in a stage of scaling deployment and requires significant capital support.

In terms of financing amounts, the highest projects are self-service miner GRIID, mining company Genesis Digital Assets, and crypto hardware wallet Ledger.

Web 3 Financing Overview

Web 3 is the concept of a new version of a decentralized World Wide Web based on blockchain. The concept of Web 3 was created by Ethereum co-founder Gavin Wood in 2014, but it gained significant popularity in 2021.

Web 3 Financing Amount

In 2021, the total financing amount for Web 3 was $2.2 billion, with a dramatic surge of nearly $1 billion in November alone.

Web 3 Financing Rounds

The financing rounds for Web 3 are also primarily seed rounds, as the applications of Web 3 are still in a very early stage.

From the project financing amounts, leading companies providing blockchain solutions for game publishers, Forte, blockchain gaming company Mythical Games, and smart contract programming language Daml stand out.

2021 Blockchain Financing Footprint Insights

Three Major Trends in Blockchain Investment and Financing in 2021

1. Active Investment and Financing, Capital Inflow Gradually Scaling Up

Blockchain, as a decentralized data ledger for secure sharing, is one of the underlying technologies driving decentralized transactions in finance and other fields. As research and application of blockchain technology become increasingly mature, its industry value and potential have gained widespread recognition from technology investment institutions, prompting keen capital to flood into the blockchain world.

As mentioned above, compared to 2020, the number of financing events in 2021 increased by 525%, and the financing amount increased by 790%. This exponential growth tells us that investment institutions are entering the blockchain field on a large scale.

2. Numerous Segmented Fields, Diverse Application Scenarios

In 2021, concepts like the metaverse and NFTs exploded, leading to the emergence of many segmented fields in the blockchain world. NFT DAOs, SocialFi, and GameFi projects have risen rapidly, attracting the attention of investment institutions with advanced vision and a willingness to embrace new things.

With the development of blockchain technology, its application scenarios are becoming increasingly diverse, creating more possibilities for the blockchain world and even the physical world.

3. Early Financing Stages, Homogenized Project Development Processes

We see that the financing stages of blockchain projects are generally early, still in a blue ocean phase, and it will take some time to fully mature.

Many projects are eliminated in the rapid iteration and fierce competition in this field. This requires blockchain projects to seize opportunities, showcase core technologies, and demonstrate strong community governance vitality to become long-term, viable blockchain projects.

2021 Blockchain Financing Future Outlook

In 2021, blockchain financing surged, with a bright outlook. Financing rounds concentrated on strategic investments and A rounds, with innovative projects in the startup phase receiving enthusiastic capital support. CeFi and DeFi remain the main investment areas, but infrastructure, NFTs, and Web 3 are also thriving, attracting increasing attention from investors, with a trend of catching up to mainstream sectors.

Keeping an eye on capital dynamics is a must for individual investors. By paying close attention to capital movements, it is possible to discover quality projects before market booms and keep pace with the rapid iteration of the blockchain field.