2024 Blockchain Industry Financing and Market Dynamics Research Report#
I. Report Overview#
2024 is a year of rapid development and adjustment in the blockchain industry, with the financing market continuously evolving alongside technological innovations, market price fluctuations, and changes in the macroeconomic environment. Bitcoin and Ethereum reached historical highs in March 2024, followed by significant market volatility. Against this backdrop, venture capital (VC) financing activities have also exhibited a unique rhythm, reflecting a lag effect between market sentiment and investment decisions. By analyzing financing data and quarterly performance across different sectors, we can reveal investment trends, technological advancements, and future development potential in the blockchain industry.
II. Financing Data and Project Distribution Analysis#
As of September 5, 2024, a total of 395 disclosed blockchain financing projects have been recorded, covering multiple sub-sectors including artificial intelligence (AI), decentralized finance (DeFi), blockchain gaming (GameFi), Layer 1, and Layer 2. The following table shows the distribution of total financing amounts and project numbers by category:
| Project Category | Total Financing (10,000 USD) | Proportion (%) | Number of Projects |
|---|---|---|---|
| AI | 39787 | 13% | 51 |
| DeFi | 89505 | 29% | 167 |
| Layer 1 | 71648 | 23% | 31 |
| Layer 2 | 54918 | 17% | 46 |
| GameFi | 56034 | 18% | 100 |
III. Quarterly Financing and Project Number Trends#
1. AI Projects: Continuous Growth, Broad Investment Prospects#
AI is a highlight of blockchain financing in 2024, with both financing amounts and project numbers showing a continuous growth trend. Specifically, the number of investors in the AI sector is gradually increasing, with financing rising from 89.87 million USD in Q1 to 175.10 million USD in Q3, and the number of projects increasing from 15 to 19. This growth trend reflects the immense potential of the deep integration of blockchain and AI technologies. Applications of AI in decentralized finance, automated smart contracts, and prediction markets have continuously enhanced VC's willingness to invest in this field. It is expected that AI will become a key driving force in the blockchain ecosystem, continuing to attract substantial funds and resources.
2. DeFi Projects: Highest Market Share, But Slowing Growth Momentum#
DeFi projects dominate the blockchain financing market, accounting for 29% with a total financing of 89.505 million USD. However, from a quarterly trend perspective, the total financing amount and project numbers for DeFi peaked in Q1 and then gradually declined. The financing amount in Q1 was 34.874 million USD with 59 projects, while in Q3, the financing dropped to 22.030 million USD with 43 projects. The DeFi market experienced explosive growth from 2020 to 2023, but data from 2024 indicate that VC investors are beginning to conduct more cautious evaluations of the business models and sustainability of DeFi projects. Nevertheless, DeFi remains one of the most mature application areas in blockchain technology, and may attract investment again through emerging innovations such as synthetic assets, decentralized insurance, and automated market making.
3. GameFi Projects: Early Prosperity, Decline in Q3#
GameFi showed strong performance at the beginning of 2024, with total financing amounts of 25.817 million USD and 18.440 million USD in Q1 and Q2, respectively, and project numbers of 36 and 44. However, entering Q3, the market enthusiasm for GameFi noticeably declined, with financing amounting to only 11.777 million USD and project numbers dropping to 20. This change reflects the high volatility of the blockchain gaming market. Despite the significant potential of blockchain gaming in attracting users and funds, challenges faced by its business model (such as low user retention and sustainability issues) have made investors more cautious in Q3. The future performance of GameFi will depend on its ability to achieve stronger user engagement and innovative gaming economic systems.
4. Layer 1 Projects: Funding Peak in Q2, Sharp Decline in Q3#
Layer 1 projects attracted substantial funding in Q2, with financing reaching 53.798 million USD, a significant increase from 16.600 million USD in Q1. However, in Q3, financing plummeted to 1.250 million USD, and the number of projects dropped from 16 in Q2 to 2. As the infrastructure of blockchain technology, Layer 1 projects rely on large-scale technological innovations and ecosystem development. Therefore, the surge in Q2 financing may be related to the launch of major projects or technological breakthroughs, while the sharp decline in Q3 indicates that the market entered a phase of observation and adjustment after significant progress. The high threshold of Layer 1 technology leads to considerable financing volatility, but in the long run, it remains a core driving force for the development of the blockchain industry.
5. Layer 2 Projects: Steady Development, Slowing Growth Rate#
The financing amount for Layer 2 projects peaked at 35.180 million USD in Q1 and gradually decreased, with financing amounts of 12.828 million USD and 6.910 million USD in Q2 and Q3, respectively. Although the number of projects remained relatively stable, the decline in financing scale indicates that market demand for Layer 2 scalability solutions is gradually stabilizing. Layer 2 solutions aim to enhance the scalability and transaction efficiency of blockchain, making them one of the key technological directions in the blockchain industry today. Despite a reduction in financing in the short term, the practicality and importance of Layer 2 technology ensure its continued long-term development.
IV. Relationship Between Market Prices and Financing Trends#
In Q1 2024, the prices of Bitcoin and Ethereum reached historical highs of 73787.1 and 4049.66, respectively, but contrary to market sentiment, VC financing activities were relatively conservative in Q1, only experiencing large-scale investments in Q2. This phenomenon indicates that VC investment decisions often lag behind market sentiment, preferring to enter during market corrections rather than at market peaks. A detailed analysis is as follows:
1. Lagging Nature of VC Investments
Bitcoin and Ethereum reached historical highs in Q1, but VCs did not make significant investments during this period; instead, they engaged in substantial financing during the heightened market volatility of Q2. This may be because VCs focus more on long-term value rather than short-term market fluctuations. The market volatility in Q2 provided more attractive project valuations, prompting VCs to increase their investment efforts during that quarter.
2. Impact of Market Volatility on Financing Activities
In Q2, the prices of Bitcoin and Ethereum experienced significant fluctuations, dropping from highs of 72799 and 3980 to lows of 56555 and 2791, respectively. In this market environment, investors paid more attention to the potential value of projects rather than market sentiment, especially in the Layer 1 and GameFi sectors, where substantial capital flowed in, demonstrating VCs' confidence in long-term technological breakthroughs and market potential.
3. Reasons for Reduced Financing in Q3
Market sentiment in Q3 was relatively subdued, with Bitcoin prices falling to 55798 and Ethereum prices dropping to 2353. Analyzing the financing data, the decrease in Q3 financing may be attributed to investors' cautious attitudes towards short-term market fluctuations. Project teams had secured substantial funding in Q2, and Q3 may be a phase for project development and technological advancement, leading VCs to adopt a wait-and-see approach for further progress on these projects.
V. Future Outlook and Investment Recommendations#
1. Q4 Financing Outlook#
Looking ahead to Q4 2024, financing activities are expected to rebound, particularly in the AI, Layer 1, and Layer 2 sectors. With the release of more project technological achievements and a gradual warming of market sentiment, VCs may increase their investments in blockchain infrastructure and innovative applications once again. The combination of AI and blockchain will be a focal point for future investments, as AI-driven decentralized application scenarios (such as automated decision-making in smart contracts and decentralized prediction markets) will continue to attract substantial capital. Layer 1 and Layer 2 projects are likely to draw more long-term capital as blockchain scalability and performance improve, especially projects that secured financing in Q2 may showcase technological breakthroughs in Q4, further driving capital inflow. DeFi and GameFi may experience a revival in Q4, particularly if DeFi can launch innovative products and GameFi can address key issues such as user retention, restoring market investment enthusiasm.
2. Investment Recommendations#
For VCs and investors, here are some future investment strategy suggestions:
- Focus on Technology Innovation-Driven Projects: The core value of blockchain lies in technological innovation, especially in underlying architectures (Layer 1 and Layer 2) and applications that combine with AI. Investors should prioritize projects with breakthrough technological capabilities and clear business models.
- Seize Opportunities Amid Market Volatility: Historical data shows that market fluctuations often provide VCs with opportunities to enter at lower prices. Investors can evaluate high-potential projects' valuations during periods of market pessimism and achieve higher returns through strategic investments.
- Diversify Investment Portfolios: The blockchain industry has diverse technological paths, and investors should adopt diversified investment strategies covering multiple areas from AI to DeFi, Layer 1, and Layer 2 to mitigate risks and capture more market opportunities.
VI. Conclusion#
The financing and market trends of the blockchain industry in 2024 exhibit a dual characteristic of technology innovation-driven and market sentiment fluctuations. Although financing activities in Q3 have decreased, this is merely a short-term adjustment period. With the acceleration of technological progress in Q4, financing activities are expected to become active again. In the future, innovations in the AI, Layer 1, and Layer 2 sectors will become hotspots for capital pursuit, and the revival of DeFi and GameFi is also expected to drive further development in the industry. VC investment behavior demonstrates long-term confidence in technology, enabling them to seize opportunities amid market fluctuations and achieve effective capital allocation.