How billions were invested in crypto infrastructure in 2022 and why it matters today

After analyzing more than 1,200 seed and pre-seed rounds of publicly available crypto since 2022, Lattice Fund found that the seed stage crypto market saw investors refocus on more stable and established sectors of infrastructure and centralized financing (CeFi).

This followed a period of exploration of emerging sectors in 2021.

Infrastructure and CeFi

According to the latest report from venture capital firm Lattice Fund, this renewed approach resulted in nearly $2 billion and $450 million being deployed in these sectors, representing a 3x and 2x increase compared to the previous year.

This shift evidenced “strong investor confidence” with 80% of CeFi projects and 78% of infrastructure projects successfully launching on the mainnet, far surpassing sectors such as Consumer Web3 and DeFi.

As newer verticals like NFTs and the metaverse began to lose momentum, infrastructure projects, which primarily target other crypto companies, remained a steady bet for long-term growth. Eigenlayer, for example, raised a seed round in January 2022 and has successfully scaled its exit strategy to the AVS market, attracting interest from middleware projects.

Overall, investors invested $5 billion in nearly 1,200 startups from the batch of 2022, reflecting a 2.5-fold increase over the previous year.

Ethereum continued to solidify its position as the dominant layer 1 ecosystem in 2022, attracting $1.4 billion in investment and far outpacing rival networks such as Solana, which raised nearly $350 million.

While the Ethereum and Solana projects were similarly successful in securing subsequent funding, other ecosystems struggled. The Polkadot ecosystem, for example, saw a significant 40% drop in fundraising, and no team in the NEAR ecosystem managed to raise additional capital.

Meanwhile, Binance’s ecosystem was facing massive attrition, with a third of its teams shutting down. Solana’s failure rate doubled from 2021 to 26%.

Despite these challenges, Bitcoin projects remained remarkably resilient, with 100% of teams still active after two years, highlighting their enduring stability amid a volatile market.

NFTs and the metaverse lose momentum

Attracting users became increasingly difficult during the bear market as retail interest waned. Sectors that were prominent during the 2022 wave, such as NFTs, the metaverse, and gaming, are struggling to maintain user engagement compared to two years ago.

The report also stated that sectors that dominate current narratives do not always align with long-term investor interest.

Despite having 75 teams raise close to $280 million, the metaverse has not seen any projects achieve product market fit and over 21% of teams have gone out of business.

Meanwhile, sectors like DePIN and AI, which were barely on the radar in 2022, have become some of the hottest topics today.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!