By Alicia Maher
Despite the downtrend in the crypto market since the beginning of the year, venture capital investors have injected massive cash into the market, especially the DeFi and Web3 sectors. Electric capital is a new addition to the list of companies to raise huge money to invest in the crypto space.
The company raised $1B in its latest funding round, completed on Tuesday. The company announced the funds would be invested into blockchain-related businesses, crypto networks, and Web3 protocols. Electric capital is an asset management firm focusing on new businesses in the Web3 and crypto sectors. Its most famous investments include Near, Gitcoin, Elrond, Dfinity, Celo, Bitwise, and dYdX. The firm usually finances these startups with up to $20m.
The Critical Focus For Electric Capital
On Wednesday, Ken Deeter, one of Electric Capital’s founders, revealed that the company intends to invest the majority of the $1B into five key sectors. The first would be DeFi-related firms that are built on non-Ethereum chains. Deeter remarked that the next generation DeFi users would more likely develop their projects on non-Ethereum chains even though Ethereum remains the gold standard.
The second area of investment focus for electric capital would be yield opportunities in multi-chains, especially alternative means users can access yield opportunities over multiple chains. Also, part of this would involve simplifying complex strategies in the DeFi space.
Deeter states that electric capital would look to invest in platforms that provide users with simple exposure to techniques such as downside protected lending, delta-neutral yield farming, and leveraged market making. He further stated that the new challenge for DeFi projects is growing “protocol-owned” liquidity.
Thus, electric capital seeks to provide bootstrap strategies for liquidity on new projects. Finally, the firm is interested in payment streams and vesting. Examples of such streams are loan repayments, employment, and DAO-to-DAO contracts. Deeter opined that “a completely new sub-sector of the economy could be created through standardized payment streams.”
Rising Trends
Part of Electric Capital’s fundraising report also surmised various rising trends in the DeFi industry. The report highlighted that DAOs would continue growing in popularity. Their primary objective of providing resources for small initiatives through global communities isn’t going away anytime soon.
DeFi will enable anyone to access financial capital easily, while NFTs will be the basis of new financial instruments and the bedrock for Web3. The report added that the new decentralized infrastructure would enable engineers to develop next-gen apps without failure. The report’s conclusion opined that Web3 would attract a greater number of users than Web2.
A Sharp Decline In Total Value Locked In DeFi
Since the beginning of this year, there has been a decline in the total value locked in DeFi. A DeFi llama data revealed that there are now $210B locked in DeFi projects, which is a decline from the $257B locked last December.
The data claimed that the slump in the crypto market is also responsible for the decline in the TVL in DeFi. Out of the $210B, Ethereum holds the most significant amount at $116B because it has the highest number of smart contract blockchains.