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Explosive 55% Q1 growth in Web3 and blockchain investments as VC confidence soars high in the sector

In the first quarter of this year, there was a 55% surge in Web3 investments. This promising uptick shows that venture capital firms and other investors are warming up again to things like crypto, blockchain, and Web3.

Based on the latest OnChain Report compiled by blockchain infrastructure firm QuickNode in conjunction with crypto data service Artemis, there’s a significant uptick in Web3 investments, with a rise of 55% compared to the statistics from the final quarter of 2023.

Furthermore, the report unveiled a hastening pace of Web3 investment deals, showing a quarter-on-quarter rise of 36%. These two key metrics show a robust revival in venture capitalists’ confidence and intensified investment activities.

Seed round surge indicates startup interest

Seed round transactions saw the biggest surge among all investments, with a 53% rise from one quarter to the next. This shows investors are interested in startup firms. The report also highlighted that the money raised in Seed and Series A funding rounds almost doubled between the last quarter of 2023 and the first quarter of 2024.

The OnChain Report indicates that artificial intelligence is a favorite in the Web3 sector. During Q1, AI attracted a lot of attention and investment, hinting at its vital role in the future of Web3. However, other areas like trading and developer tools saw only small increases in investment. This could be because of lower investor interest or potential doubts about lower chances for a quick profit.

The first three months of 2024 have seen exciting growth in venture capital funding for Web3. This reveals a new focus for venture capitalists – they’re investing in areas they believe can strongly change the blockchain landscape. This period has also shown more active and dedicated involvement in Web3, strengthening confidence in its significant role in the broader tech world.

In the latest report from QuickNode and Artemis, several key Web3 trends from the first quarter have been highlighted. One stand-out trend is the notable rise in stablecoin usage, which saw a 42% quarter-on-quarter increase in user activity. This activity surge has been attributed to several factors – the anticipated launch of a spot Bitcoin ETF, renewed interest in DeFi, and the introduction of Bitcoin spot ETFs.

Stablecoins have been leading the field in terms of active addresses for the last five quarters. They made up over 41% of daily active addresses in the first quarter. This data suggests that stablecoins effectively function as the blockchain’s principal means of value transfer.

Defi surges despite regulatory pressures

Regarding DeFi, the report highlights a striking 291% quarter-on-quarter rise in user activity, even amidst ongoing pressures from the Securities and Exchange Commission. The quarter closed with DeFi transactions outpacing even record-breaking stablecoin transactions, reaching a high of 7 million per day. Furthermore, all key DeFi platforms – ranging from derivatives and bridges to yield, lending, and liquid staking – saw their total value locked either double or triple within the quarter.

Besides, the active Web3 gaming addresses saw a 155% boost every quarter, showing the sector’s capacity to lure and keep its users. Many decentralized social platforms have also seen a rise in usage.

These platforms provide users greater control over their data and the possibility to share in the platform’s success, which traditional platforms can’t offer. OnChain’s report unveiled a quarterly growth of 425% in the daily active users of these platforms.

Takeaway

Web3 technology is turning heads because it promises improved control, better opportunities to make money from data, and a lower likelihood of data tampering. Add to that user-friendly services that are much better than typical banking, and it’s no wonder that venture capitalists are renewing their interest in the area.

However, you need to bear in mind some things. The industry is not regulated yet, meaning you may face higher risks of scams and unlawful acts. Also, since Web3 technology is still quite new, changes in how it works or interacts with other systems can happen unexpectedly, which might disrupt your operations.