Venture capital funding for crypto and blockchain startups looks set to break records in 2021. As previously reported by Cointelegraph, crypto firms received more funding in the first quarter of 2021 than the whole of 2020.
Indeed, three companies in the market attracted $1.1 billion from backers in Q1 202 — a third of the total funding for crypto and blockchain firms reported in 2018. With the current bullish enthusiasm in the crypto space, VC funding appetite for blockchain startups might continue throughout the year.
This early-stage funding frenzy also appears to be spreading to the retail side with initial decentralized exchange offerings regularly becoming oversubscribed. As such, the native tokens of IDO launchpads are now some of the best-performing in the cryptocurrency space.
Blockchain private equity funding by the numbers
In Q1 2021, 129 crypto and blockchain startups received about $2.6 billion in funding, according to a Bloomberg report culled from data by business analytics firm CB Insights. This figure is already $300 million more than the total funding for such companies in the whole of 2020.
Crypto wallet provider Blockchain.com, lending outfit BlockFi and blockchain game studio Dapper Labs accounted for almost half of the $2.6 billion funding received by startups in the industry in Q1 2021. At the end of March, Dapper Labs announced a $305-million investment from sports stars and other celebrities amid growth in the sale of NBA Top Shot nonfungible tokens.
VC funding for crypto and blockchain startups in the United States has eclipsed the numbers recorded in other regions since the emergence of the crypto space, according to the recently published “Blockchain Venture Capital Report” by Cointelegraph Research. This trend is despite the lack of regularity clarity for the market in the country.
According to Jehan Chu, founder of Hong Kong-based VC investment firm Kenetic, the regulatory climate in the U.S. has done little to dissuade private equity funding for blockchain startups, telling Cointelegraph:
“Nothing is more compelling than peer pressure from the likes of Michael Saylor, Elon Musk and the stampede of institutional money charging into the market. VCs must have a position or a view on crypto, or risk missing the biggest market opportunity in a generation.”
The potential for outsized returns continues to be a driving force behind increased equity investments in crypto startups both for blockchain and mainstream VC funds. In its recently published “Blockchain Venture Capital Report,” Cointelegraph Research revealed that blockchain private equity has outperformed traditional private equity across one-, three- and five-year horizons.
Indeed, blockchain private equity performance has proven itself to be largely uncorrelated with the mainstream asset class. This trend offers some form of assurance for VC funds looking to diversify their early-stage investment portfolios.
Commenting on the basic investment thesis for VC funds in the blockchain space, Xinshu Dong, a partner at VC firm IOSG Ventures, told Cointelegraph: “Crypto is a very attractive direction with not just unparalleled growth potential but also quite promising validation, especially in the past few months from the buy-in from U.S. institutions.”
Given the marked increase in funding for crypto startups in Q1 2021, the proportion of blockchain-focused VC funding to the overall market might be set for a trend reversal. After almost peaking at 2% during the 2017 bull run, blockchain private equity fell to less than 1% of the global VC market as of the end of 2020.
This decrease can be attributed in part to the trends that emerged post-2018 bear market and the ongoing coronavirus pandemic. According to data from Cointelegraph Research, blockchain-focused VC funding dropped by 13% between 2019 and 2020, while traditional equity funding increased by 18% during the same period.
Driving force behind increased crypto funding in 2021
Since its emergence, the crypto landscape has been likened to the early days of the internet market in the 1990s and early 2000s. Where the internet boom led to the initiation and subsequent rise of sectors like e-commerce and social media, the blockchain space has been touted to drive innovations such as decentralized finance and the decentralized web.
Legacy brands that were dismissive of the promise of the then young internet space saw the rise of e-commerce and online merchants challenge the primacy of these brick-and-mortar firms in the retail arena. Social media also grew to arguably eclipse the reach of print and broadcast media as web-based services disrupted several industries.
With blockchain touted as having similar global business process disruption capabilities, several notable participants in the mainstream arena appear keen to interact with the emerging technology. This appetite for backing players in the novel arena appears even more apparent among VC firms with Dong telling Cointelegraph: “It’s an opportunity of a generation that VCs can hardly miss.”
The token economy associated with blockchain startups also offers early backers the opportunity to acquire cryptocurrencies that could appreciate in value within a short period. Even with vesting schedules that mandate a significant lock-up of these tokens for VC funds, the gains often outsize their initial equity investment.
DeFi interest and early-stage investments
Decentralized finance’s rise to prominence has offered significant expansions to the crypto market through activities like staking and protocol governance. According to Baek Kim, director of investments at VC fund Hashed: “The most important part of the crypto VC investments is that this is also an entry ticket to participate in crypto networks as a shareholder.” He added further:
“Crypto portfolios allow for investors to participate and contribute to the ecosystem in a much more engaging way than the traditional equity investments — through staking, node operations, governance proposals, liquidity bootstrapping and many more. VC participation in crypto and blockchain projects means you can be part of this paradigm shift not just as an investor but as a participant.”
This growing appetite for blockchain startups is not restricted to established players in the still-nascent crypto space. New projects, especially those in the DeFi space, are also enjoying significant interest from private equity firms looking to be early backers of the next DeFi bluechip.
In a conversation with Cointelegraph, Rob Weir, chief operating officer of upcoming DeFi platform Jigstack, attracting investments from VC funds was the easiest part of the private equity funding process. According to Weir, new blockchain projects need to consider issues such as vesting schedules and implications of token-represented equity on future price action for their native “coins.”
Weir said that balancing these key issues is essential for new projects in determining how to allocate tokens to private and public funding, adding: “VCs require a significant amount of token represented equity and consolidate a large portion of what would become selling pressure. If they deliver on their promises then they are well worth the upfront sacrifice.” He further added that “community-oriented raises leave you resource shy and carry other inherent risks.”
Early-stage backing by retail investors is also another growing trend in 2021, especially amid the gains enjoyed by projects bootstrapped on IDO launchpads. Launchpad platforms often utilize a tiered subscription package that allows holders of their native coins to gain access to project token allocations before the public listing.
According to data from cryptocurrency aggregator CryptoDiffer, the top 10 launchpad platforms in the market have recorded average returns on investment ranging between 11.3% and 68.2% thus far in 2021.
TrustSwap Launchpad hosts token offering for RegTech platform Sekuritance
Sekuritance, a CeFi/DeFi ecosystem delivering compliance, regulatory, transaction monitoring, and identity management solutions, is collaborating with TrustSwap, a full-service blockchain asset platform, to support the execution of its SKRT token offering starting on May 8th, 2021 at 9:00 AM PST.
The cryptocurrency economy has taken the world by storm and it is here to stay. Just like traditional finance, the risk of fraud, misuse, abuse also exists in the crypto space. Due to the decentralized and semi-anonymous nature of blockchain, these factors can be compounded resulting in hesitation of adoption by financial regulators and banking institutions. While there may not yet be a bulletproof solution, there are ways to mitigate risk and potential losses, and blacklisting.
Most people who are active in the DeFi space are also using some form of traditional banking service (credit cards, bank accounts, mortgage/insurance payments, retail commerce, etc.). When crypto proceeds start moving between these realms, the banks and regulators want to know where the money came from, whether it has been declared or taxed effectively, whether it has passed through unauthorized darknet services, and so many more questions needing specific answers. In the event that any of the above questions result negatively, the traditional finance ecosystem is most likely to reject the onboarding or the use of those proceeds to pass through their networks.
The Sekuritance RegTech Suite addresses this by making available specific services and modules to address the various regulatory and compliance requirements.
Sekuritance recognizes that there are many jurisdictional challenges in the RegTech niche so, rather than competing with other software-as-a-service providers in the RegTech industry, they are invited to make their API offerings available also through the Sekuritance Partner Marketplace so that merchants and individuals around the world can enjoy an All-In-One RegTech Gateway.
The Sekuritance ecosystem is comprised of 8 main products:
1. Sekur.Vault (Data Tokenisation Vault)
Sekur.Vault is a unique omni-vault, audited to the highest level of industry security standards and tweaked to not only store what is commonly referred to as “Rubbish In, Rubbish Out” but to add value to the output upon retrieval by cross-consumption of the other Sekuritance modules such as BIN checks, KYC checks, AML checks and more.
The platform’s robust and simple to use API set and dedicated user interface allows the secure storage of Card Data (Debit, Credit, Alternate); Crypto Wallet Private & Public Keys; Sensitive Personal Data; Confidential Corporate Data; KYC, KYB Related Data; Transaction Data for BI and AI and more.
2. Sekur.MFA (Multi-Factor Authentication)
This omni-auth module caters primarily to 3D Secure services for the traditional card payment industry. Development has also started for an on-chain decentralized identity management and claiming process. Our own unique acquirer-agnostic 3D Solution allows merchants to validate and process 3D checks (both versions 1 and 2) before taking payment.
3. Sekur.Connect (RegTech Marketplace)
The Sekuritance RegTech SekurSuite platform is a powerful toolkit on its own but trying to stay ahead of all the global jurisdictions, updates to regulations and policies, AML guidelines, etc. is a mammoth task. So, rather than try to outsmart all the other valuable and recognized players in the industry, Sekuritance is creating a RegTech marketplace where software-as-a-service providers and developers can showcase their solutions and participate in the SKRT token economy.
Sekur.Alert functionality connects to specialized datasets to help keep our customers safe and help them ensure that they are doing business with wallets and identities of good standing. To help grow this dataset, the crypto community is invited to report any fraudulent activity to Sekuritance so that the whole community can be better protected. Every new unique and verified report gets to participate in the SKRT Loyalty and Reward program.
KYC, KYB, KYT, AML, Sanction Screening, and other rule engine applications are all available on the Sekuritance platform. Businesses and institutions can use these tools to identify who customers are and their eligibility for specific product offerings. They can use the Sekuritance RegTech platform to get transaction and IP “Risk Scores” and sub-scores as well as other data in order to prevent fraud and abuse.
The anonymity of cryptocurrencies is a myth. Very few mixing services can outwit modern de-anonymization technologies for Bitcoin tracking and other cryptocurrency alternatives. No one has a clear understanding of how fast the RegTech niche will be evolving but one thing beyond question — regulation of the cryptocurrency space will tighten and all will have to accept the new rules and play by them.
Sekuritance strives to become one of the leading vendors of RegTech solutions for the crypto and fiat industry and believes that the openness of financial data on blockchains will be a driver for regulatory institutions to reinforce control. With a powerful blockchain analytics toolset like Sekuritance, regulatory bodies could end money laundering and make financial reporting easy and transparent.
The Sekuritance Sekur.Certify Blockchain Wallet Verification service allows for a user to claim controlling power certification on a particular wallet once a number of actions would have been performed, KYC & AML checks confirmed and crypto investigation on the wallet completed.
Details of Sekuritance Token Offering
The Sekuritance token offering will be executed by leveraging the TrustSwap Launchpad. Upon the successful conclusion of the offering, a Uniswap pool will be created on May 13th, 2021, and trading can commence for use of SKRT in the Sekuritance network. Alongside the offering, Sekuritance will be showcasing a preview of its RegTech Suite and Partner Platform.
TrustSwap technology utilizes secure peer-to-peer transactions via TrustSwap SmartLaunch; which ensures that Sekuritance and its community can transact securely and without fear of participants or team members negatively impacting the markets following the public offering. TrustSwap’s time-based SmartLock ensures a methodical distribution to mitigate the risk of unauthorized token transfers.
Sekuritance will use TrustSwap SmartLocks for:
- Team token vesting
- Token holder vesting
- Liquidity locks
For more information about Sekuritance visit https://www.sekuritance.com.
Shanghai Man: VeChain on TV, DOGE flips BTC volume, Hotbit hack and more …
This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
Will DOGEmania ever stop?
Dogecoin has officially flipped Bitcoin in a few categories here in China, with DOGE trading volume on leading Chinese exchange Huobi surpassing that of leading assets ETH and BTC. On May 6th, according to CoinGecko, DOGE volume made up more than 15% of total exchange volume, whereas BTC and ETH were around 8% each. Searches for ‘Dogecoin’ on WeChat surpassed searches for Bitcoin, with 2.3 million versus 1.7 million on May 5th. Dogecoin has become increasingly appealing to the Chinese retail community since earlier this year as many are attracted to the virality and get-rich-quick potential of the colorful DOGE community.
Hacking attempt fails, but causes a major ruckus
Centralized exchange Hotbit was the victim of a hacking attempt on April 30th. The good news was that assets appear to be safe on the platform. The bad news was that user data was compromised, leading to a corrupted database. Trading, deposits and withdrawals have all been paused while the exchange attempts to restore normality. The Chinese exchange has been communicating actively via Twitter, with the interrupted service lasting potentially another week. Hotbit is well known for listing a diverse range of assets, making it a popular spot among more risk averse investors.
Shenzhen-based HOO launches Smart Chain contender
Hoo.com became yet another exchange to launch an Ethereum Virtual Machine, or EVM-based, smart chain, attempting to bridge their CeFi users into the DeFi space. The chain, currently in testnet, boasts low fees of just 0.001 USD per transaction and over 500+ transactions per second, as well as compatibility with Ethereum, BSC, and HECO. Since the start of the year, Hoo’s token has increased by over 350%. Other Chinese exchanges, including OKEx and Gate, have also launched smart chains. Smart chains are proving an attractive way to let users maximize yield while still letting the exchange capture value from the process.
VeChain on national TV
English-language and state-run business channel CGTN created a short expository video on blockchain’s growth post-COVID19. The video and article featured a close look at VeChain’s progress in developing business solutions, explaining how the technology could be applied to the food safety and infection control industry. The media company shot a short video inside the office and interviewed a few of the developers, indicating that the company has done well to comply with regulatory requirements in the tightly run country. It’s no secret that VeChain has a top position and close relationship with many government backed organizations, which is an enviable position for any enterprise Blockchain-as-a-Service provider.
Rising salaries for blockchain devs
The Beijing Human Resources and Social Security Bureau recently released the 2021 Beijing Human Resources Market Salary Survey Report (First Quarterly)”. According to the report, new and hot jobs, which included the tech space, had a median average monthly salary mainly in the $3,000 to $4,600 range. Blockchain engineers comfortably eclipsed that with a wage of $6,700 per month, showing the growing demand for the skills. By contrast, the average annual salary of a blockchain developer in the U.S. often exceeds $12,500 per month, according to recruitment firm Hired.com, nearly double the going rate in Beijing.
Miners back up and running… away?
Mining appears to have resumed as normal following the outages after a deadly coal mine accident last month. The incident required rigorous inspections of mining facilities, forcing many ASIC miners to turn off their machines. Hashrates have currently recovered to near the rates they were prior to the incident in the middle of April. One interesting shift, however, is that the industry appears to be gradually shifting from China to North America. F2Pool founder Chun Wang noted that for the first time in 8 years, more than half the BTC hashing power was coming from outside of China. This may have been partially tied to the incident, but is a trend that many experts are following as mining regulations in China appear to be growing stricter.
XRP, Dogecoin, Cardano Price Analysis: 06 May
With Bitcoin’s market dominance falling once again and the altseason gaining steam, the likes of XRP, Dogecoin, and Cardano have all appreciated significantly on the price charts over the past week or so.
XRP’s recovery since falling to close to $0.20 on the back of the SEC filing a lawsuit against Ripple Labs has been impressive, with the alt recording YTD returns of 510% at press time. Its price action over the past week, however, has been very inconsistent, with bouts of appreciation followed by sharp price falls on the charts. Even so, the cryptocurrency was close to recuperating all its losses following the depreciation on the 25th of April.
While Parabolic SAR’s dotted markers were under the price candles and underlined the bullishness in the XRP market, Awesome Oscillator gave the opposite signal, with its histogram picturing a fall in market momentum.
Dogecoin has been one of 2021’s best crypto-performers, with the alt hiking astronomically to register YTD returns of 10,800% this year. DOGE’s hike has been particularly exponential since the month of April, with the same more or less being the trend in May too. In the last week alone, DOGE has climbed by over 115% on the charts, with many expecting the popular meme-coin to continue surging at least until Tesla CEO Elon Musk’s appearance as “Dogefather” on Saturday Night Live.
The scale of its bullishness was evident when Dogecoin’s technical indicators were checked out. While Chaikin Money Flow was holding steady close to the 0.20-mark, Relative Strength Index noted a slight dip after a visit to the overbought zone.
Mark Cuban was one of the many crypto-proponents to come forward and comment on the meme-coin’s utility and purpose recently.
After a brief phase in February which saw ADA surge up the charts to lead the altseason for a time, the past few months have mostly seen Cardano trade within a tight price channel. At the time of writing, ADA was close to breaking out of the said range, while also inching closer to its previous ATH of $1.55 on the price charts.
In the last three days, ADA hiked by almost 20% on the charts.
While Bollinger Bands remained far apart to highlight volatility, MACD line was moving away from the Signal line to indicate the crypto’s latest bullish credentials.
The altcoin was in the news recently after IOHK’s Charles Hoskinson hit back at critics to comment that it’s bizarre to suggest that Cardano is a blatant scam.
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