Digital asset investment firms poured $2.7 billion into decentralized finance projects in 2022, up 190% from 2021, while investments into centralized finance projects went the other way — falling 73% to $4.3 billion over the same timeframe.
The staggering rise in DeFi funding was despite overall crypto funding figures falling from $31.92 billion in 2021 to $18.25 billion in 2022 as the market shifted from bull to bear.
According to a March 1 report from CoinGecko, citing data from DefiLlama, the figures “potentially points to DeFi as the new high growth area for the crypto industry.” The report says that the decrease in funding toward CeFi could point to the sector “reaching a degree of saturation.”
Funding amount by sector in the cryptocurrency market between 2018-2022. Source: CoinGecko
The near three-fold increase in DeFi investment is also a staggering 65-fold increase from 2020, at the start of the last bull run.
According to CoinGecko, the largest DeFi funding in 2022 came from Luna Foundation Guard’s (LFG) $1 billion sale of LUNA tokens in February 2022, which came about three months before the catastrophic collapse of Terra Luna Classic (LUNC) and TerraClassicUSD (USTC) in May.
Ethereum-native decentralized exchange (DEX) Uniswap and Ethereum staking protocol Lido Finance raised $164 million and $94 million, respectively.
Meanwhile, FTX and FTX US were the largest recipients of CeFi funding, having raised $800 million in January — accounting for 18.6% of CeFi funding in 2022 alone. The crypto exchanges, however, collapsed only 10 months later and filed for bankruptcy.
Other areas of investments included blockchain infrastructure and blockchain technology companies, which raised $2.8 billion and $2.7 billion, respectively, a trend that has remained strong over the last five years, said CoinGecko.
Henrik Andersson, the chief investment officer of Australia-based asset fund manager Apollo Crypto, says his firm is looking at four specific sectors within crypto as of late:
The first is “NFTfi,” which he said results from the combination of DeFi and NFTs. These are NFT projects that use DeFi to…
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