2023 has been a somewhat slow year for Web3. There are fewer investments because of the liquidity crunch, and VCs have a lower appetite for risk because of rising interest rates.
While there have been encouraging signs in the past few weeks, it is undeniable that the spate of investment in Web3 products has reduced from its 2021 peaks. This slowdown in investments has also contributed to the liquidity crunch in crypto as well.
Despite this, interesting and exciting projects are still receiving funding from VCs. In this article, we will be taking a look at the top 5 Web3 investments in the first quarter of 2023.
The projects on this list have recently received millions of dollars in funding from DWF Labs. Despite the current liquidity crunch in crypto, DWF Labs has doled out over a hundred and fifty million in funding in the first quarter of 2023 alone. This means they are one of the — or perhaps the most — active venture capitalist in DeFi this year. It all goes to show just how much faith the firm has in the future of crypto and DeFi projects.
However, it's important to know that access to investment isn't a guarantee of success. The companies listed below might eventually fail despite the investment in them. That's because crypto is going through a trying time, and the projects that will survive this crypto winter will be very special indeed
The first project on this list is Synthetix. Synthetix is a decentralized liquidity layer on Ethereum and Optimism. Over the years, Optimism has served as a backend for some of the most innovative projects in DeFi.
Over the past two to three years, Synthetix has displayed extraordinarily deep liquidity and composability. Despite the crypto ecosystem experiencing the worst liquidity crunch ever, Synthetix has remained standing. This has put it in the right position to power products like Lyra, Polynomial, and Kwenta. With Synthetix’s liquidity network, dApps now can offer their users a lot of financial derivatives with low slippage, low fees, and exciting use cases.
All of these have made Synthetix an attractive option for VC funding. In late March 2023, the project entered into a partnership worth $20 million with DWF Labs. The value of the partnership shows just how much the market believes in Synthetix and just how far the project can grow.
As part of the funding deal with DWF Labs, the firm will concentrate on integrating Synthetix’s perpetual futures into DWF Lab’s business as a part of the funding deal. The deal will also seek to improve Synthetix’s liquidity across both centralized and decentralized platforms.
Yield Guild Games YGG
Yield Guild Games (YGG) is currently the world's biggest Web3 gaming guild. Web3 gaming guilds are organizations that allow gamers to play games without paying the exorbitant fees that some of these games command. The NFTs for games like Axie infinity, for example, are so expensive that the average gamer literally can not afford to play them.
YGG is the first gaming guild in Web3 to give these opportunities to average gamers. Over the past three years, the guild has only grown stronger and has gotten even more members. Asides from allowing regular gamers to play expensive games, the guild also has Web3 partnerships with organizations like the Guild Advancement program and the Nas Academy. The organization also has an elite esports team that allows expert gamers to make a living off games.
In the middle of February 2023, YGG announced that it had raised 75 million dollars in venture capital funds. According to Beryl Li, the co-founder of YGG, the fundraising came at a perfect time because the Web3 winter had bottomed out. Right now, YGG is backed by the biggest investors in crypto – a16z, DWF Labs, Mechanism Capital, and ParaFi Capital.
Mask Network MASK
The Mask Network is no newcomer to the Web3 scene as the network has been live since 2017. Today, the network is a leader in the emerging decentralized social network scene. And that scene is only growing, especially as fears and uncertainties around traditional social media companies like Twitter continue to grow.
Mask Network is also one of the earliest community members of the Bluesky protocol, the decentralized social network founded by Jack Dorsey. The network also maintains the most active instances of Mastodon and is looking to expand even faster.
Over the last seven years, the Mask Network has accumulated over a hundred million dollars in funding. This is proof of the viability of the Mask idea, and it shows exactly why the network’s backers continue to back it. In the middle of January 2023 DWF Labs invested in the Mask Network by purchasing five million dollars worth of Mask tokens.
According to DWF Labs, this investment would be used to continue expanding the network and strengthening the emerging decentralized social media scene. Since Mask Network is arguably the leader of this subsystem it just makes sense more investment in the project would lead to even further growth.
Conflux CFX is the only regulatory-compliant blockchain in China, which gives it a unique market advantage in the region. In the past year or so, the chain has experienced enormous growth. For example, the Chinese answer to Instagram, Xiaohongshu, has integrated with the network to create a permissionless mainnet. Now, Xiaohonghsu allows users to display their NFTs on their profiles as a result of this integration.
Another example of the growth that Conflux CFX is experiencing can be seen in its integration with China Telecom, China’s second-largest wireless carrier. China Telecom has now partnered with Conflux to develop blockchain-enabled SIM cards. This will increase the adoption of Web3 technology in the long run.
Interestingly, the market has responded rather gleefully to the strides Conflux CFX has been taking. Despite being in a crypto winter, the blockchain’s native coin has increased its value by more than x10 since the beginning of 2023. And there is no sign it is slowing down.
Conflux CFX has not only seen rapid improvements in its market cap since 2023, but it has also drawn the attention of VCs. DWF Labs recently bought about $10 million of the network’s native token after signing an investment agreement with it. That made the network one of the very few projects receiving millions of dollars in funding in 2023.
Flare (FLR) is an EVM-based layer 1 chain created to provide developers with decentralized access to data from off-chain sources like other blockchains and the internet. The goal of the chain is to enable the creation of blockchain applications that are more useful to more people through access to real-world data. Developers can use the chain’s data acquisition protocols for building bridges, cross-chain messaging, innovative DeFi products linked to real-world triggers, and other such tools which might not have been previously possible to build in a decentralized way.
In 2021, Flare FLR raised about $11 million from its seed round. This investment went into propelling the network, and now it has built a network that is fast, secure, low fee, and with very little carbon footprint.
In the first quarter of 2023, DWF Labs made a move to expand this network by investing an undisclosed amount in the network. The hope is that this new investment will help the network build new use cases and monetization models.
Fetch.ai is a platform that powers decentralized applications with AI capabilities. Today, Fetch.ai is arguably one of the few projects in Web3 trying to power innovation through AI. The project creates what it calls smart agents that help builders act on behalf of humans and organizations. It also has an AI service that automates decentralized machine learning.
The goal of Fetch.ai is to create a decentralized system that has a limited need for user interaction and intermediaries. This will reduce costs and increase operational efficiency as well. To Fectch.ai, the only way to build this network of automated agents is through comprehensive machine learning. Through this, the project will be able to build stronger agents that will be able to perform even more complex machine logic on their own.
At the end of March 2023, DWF Labs announced a strategic partnership with Fetch.ai worth about $40 million. The goal of the partnership is to support the development and deployment of AI agents through Fetch.ai. The investment will also support the research and development needed to give AI agents an even stronger use case in Web3.
The one thing these investments in Web3 have shown is that there is still a lot of faith among investors in the underlying principles of decentralized technology. That faith may just be what Web3 needs to power through its current liquidity crisis.