The continuous crypto winter has significantly impacted the fundraising endeavors within the cryptocurrency industry. The third quarter of the year was no different.
Recent statistics indicate that the cryptocurrency sector witnessed a significant decline in both the total amount of funds raised and the volume of deals, hitting levels not witnessed since the fourth quarter of 2020. During this quarter, the combined funding amount and the number of deals fell to record lows, dropping to less than $2.1 billion across a total of 297 transactions. This represents a 36% decrease in both metrics when compared to the previous quarter.
Based on Messari's report, decentralized finance (DeFi) led the way in terms of the number of funded transactions, with a total of 67 deals, while chain infrastructure received the highest share of funding, making up 18% of the total. The gaming sector also had a strong quarter, attracting nearly $250 million in investments.
Throughout Q3, DeFi emerged as the sector with the highest number of funded projects, totaling 68 deals. Investment activity in this sector was notably concentrated, with the exchange category representing 38% of all invested capital across 33 transactions. In total, DeFi projects collectively secured $210 million, with an average deal size of $3 million.
Binance Labs actively participated in the DeFi sector, engaging in seven deals during the quarter. This included strategic investments of $10 million each in Helio Protocol, a liquid staking platform on BNB Chain, and Radiant Capital, a money market built on LayerZero. The largest DeFi deal of the quarter involved a $16.5 million Series A funding round for Brine, an order-book DEX constructed on Starkware.
Additionally, three out of the top four investors in DeFi, based on the number of deals, had close affiliations with the ecosystem. Binance Labs, the Base Ecosystem Fund, and Polygon collectively accounted for 16 deals during the period.
Despite being entangled in legal disputes, Binance Labs emerged as the most engaged investor in Q3.
Binance's venture capital and incubator division recorded 23 deals, surpassing the next closest investor, Robot Ventures, by more than twice the number of investments. Throughout 2023, Binance Labs consistently pursued an active investment strategy, with a particular focus on the DeFi and gaming sectors, while also expressing interest in projects advancing zero-knowledge and privacy technologies.
Notably, 12 of these deals involved projects participating in its accelerator program. Even when excluding these accelerator-related investments, the firm's remaining 11 investments would still place it on par with Robot Ventures in terms of Q3 deal activity.
