Despite the bad market in crypto, venture capital firms continue to invest substantially in blockchain and Web3 initiatives.
Exchange of digital assets Huobi Global has launched a new investment arm focused on decentralized finance (DeFi) and Web3 initiatives, demonstrating venture capitalists’ growing interest in the blockchain economy.
According to a Huobi spokeswoman, the new investment arm, dubbed Ivy Blocks, has over $1 billion in crypto assets under control to deploy. According to the company, the funds will be used to “discover and invest in innovative blockchain startups,” according to the company.
Ivy Blocks will provide various services to selected companies, including an asset management platform, a new blockchain incubator, and a dedicated research arm, in addition to funding. According to Lily Zhang, Huobi Global’s chief financial officer, the firm’s asset management department will make “liquidity investments” to enable DeFi and Web3 initiatives to get up and running.
Capricorn Finance, an automated market maker, built on the Cube blockchain, was the first project to secure funding, according to Ivy Blocks.
The company’s interest in DeFi comes when the sector’s overall worth has dropped by more than half from its peak. According to industry estimates, the DeFi business is worth about $133 billion in total value locked, or TVL. In December 2021, DeFi TVL reached a high of $316 billion.
The DeFi sector is down 58 percent from its high in terms of TVL. DeFi Llama is a chart.
DeFi’s problems are a sign of the market’s so-called crypto winter, sweeping the industry since the beginning of 2022. Market-cleansing down cycles, according to analysts, are beneficial since they frequently follow “irrational” periods in which asset values are aggressively bid up.
Despite the downturn, venture capitalists continue to pour money into the crypto space, with Web3 and metaverse play receiving the most attention. In the first quarter alone, $14.6 billion was invested in blockchain and cryptocurrency initiatives. To put it in context, total venture capital investment in 2021 is expected to be around $30.5 billion.