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Half-year review of 82 encryption funds: DOT becomes the asset of choice

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The gift of a bear market is that many asset prices are even below what some funds entered during a bull market, and everyday investors face more opportunity than ever before.

Original title: " Messari Fund Analysis H1'22: Examining Portfolios of Crypto Funds "

Original author: Kaushik Guduru, Messari analyst

Original compilation: iambabywhale.eth, Odaily Planet Daily

Main point:

·DOT is once again the preferred asset, with 35% of the funds tracked by Messari having DOT holdings;

·SOL surpassed LUNA has become the asset with the highest market value in the fund's holdings. Overall, due to recent price fluctuations, the market value of most assets has dropped by at least 50%;

·The top three positions are all smart contract platforms, smart contract The platform is also the sector that received the most investment in the first half of the year.

In the first half of 2022, the cryptocurrency space is in chaos. Negative sentiment has sent prices to their lowest levels since December 2020. Despite market volatility, new institutional investors are entering the market quickly. Hedge funds, venture capital (VC) funds, high-net-worth individuals, and DAOs continue to seek out the best investment opportunities in all areas of cryptocurrency.

Messari typically analyzes and compiles liquid and illiquid portfolios of top VC firms and hedge funds in crypto on a quarterly basis, but this year we combined the Analysis of the first and second quarters. Illiquid investments were selected for this analysis based on their potential to issue tokens in the near future. We compile this data using sources such as Dove Metrics, Crunchbase, and Public Portfolios. Due to the assumption that most funds hold Bitcoin and Ethereum, we omit them in the analysis.

Fund Investment Analysis

2021 Q4 Analysis Review

The last time Messari conducted such an analysis was the analysis of 57 institutions in March 2021. The five assets with the most funds held are: DOT, ROSE, NEAR , LUNA, DYDX.

As new players continue to enter the crypto space, the number of funds analyzed has grown from 57 to 82 funds and assets from 603 since Q4 2021 grew to 678 species.

Investment analysis for the first half of 2022

After a comprehensive analysis of all investment portfolios, we have The asset with the most fund holdings is still Polkadot (DOT), supported by 29 out of 82 funds, which means that 35% of the funds we track are betting on the success of the Polkadot smart contract platform. In strong developer growth in 2021 (faster initial ecosystem growth) and the recently released interchain messaging format (XCM), Polkadot continues to position itself as a leader in the smart contract space. Meanwhile, funds holding DOT will continue to show their influence as projects race to gain a seat in the 2022 parachain auction.

Second The most widely held asset is Oasis Network (ROSE). In third place is a newcomer to the top five, Nervos Network (CKB), which has soared 12 places. With major protocol updates and progress on interoperability and privacy features, Nervos has strong goals for 2022. It’s worth noting that the top three are all smart contract platforms, indicating the industry’s continued dominance in the crypto space.

The joint fourth most popular asset is dYdX (DYDX) and Radicle (RAD). Radicle made a big jump this time around after being out of the top 20 in the previous report. dYdX was one of the most popular DeFi projects in the first half, while Radicle was the most popular asset in the data management space. The fifth most popular asset is the emerging smart contract platform NEAR Protocol (NEAR), which dropped from third to fifth place.

In the last analysis, Terra (LUNA) was the fourth most popular asset. According to our analysis, Terra is technically the 12th most popular asset, but it was excluded from the analysis since most funds invested in Terra exit during asset crashes. In addition, Terra also has the highest circulating market capitalization in the previous analysis. Clearly, these days are different.

Of the top 30 investment assets, the one with the highest market capitalization in circulation now belongs to Solana (SOL). In the last analysis, Solana had the second largest market capitalization, behind Terra. Solana’s role as a leader in the smart contract space is evident, as its market capitalization is almost double that of the second-placed Polkadot. SKALE Network ( SKL ) has the asset with the lowest market capitalization in circulation among the top 30 assets, while FTX Token ( FTT ) has the asset with the lowest market capitalization in circulation among the top five assets. Avalanche has fallen below Polkadot since Q4, while Uniswap ( UNI ) and FTT have both surpassed Cosmos (ATOM) and NEAR. Furthermore, most assets have lost at least 50% of their market capitalization compared to the last analysis due to recent price volatility.

Although the large Most tracks saw only small growth, small declines or flat rates, but investment continued to increase across all tracks. Web3 infrastructure has been at the forefront of investment as industries such as data management and file storage continue to attract interest through assets such as Filecoin (FIL) and RAD. Other project categories are very broad, including games, AR/VR platforms, domain name protocols, and decentralized social networks. These tracks showcase a variety of areas that the crypto industry is just beginning to investigate.

This industry breakdown covers only the top 50 venture capital assets. Outside the top 50, investments in gaming, metaverses, and NFT infrastructure popped up. Framework Ventures recently launched a $400 million fund to support Web3 games, and a16z launched a $600 million gaming fund. Meanwhile, some investment firms like Sfermion are only focused on investing in the NFT ecosystem. Such investments expand the opportunities for funds to hold non-traditional crypto assets. Money invested in games could end up owning native NFTs or digital land and tokens. Some funds have begun exploring the idea of directly holding blue-chip NFTs such as BAYC in their portfolios. Monitoring early trends in the venture capital space can help provide investors with an outlook on new market trends in the future.

Finally, due to recent events, it is important to acknowledge the risks of the Three Arrows Capital portfolio. It is no secret that Three Arrows Capital faced solvency issues following the broader market downturn. In order to obtain liquidity to repay creditors, Three Arrows Capital's portfolio assets are at risk of being sold or repossessed by their counterparties. As more news emerges surrounding Three Arrows Capital's situation, it will be important to continue to monitor the fund's confirmed holdings. In addition, if other funds face similar liquidity problems, their investments will also face greater scrutiny.

Thoughts on Investing Following Crypto Funds

In a Preaching Decentralization and Financial Opportunity In the industry, it is always important to remember that the institutional environment operates very differently than your everyday investor. Still, the beauty of the crypto market is that any individual can follow a public fund's portfolio. This helps create a more level playing field compared to a traditional venture capital environment that operates without retail investor competition.

However, increased accessibility has not eliminated the risk factor behind any of these assets. These funds have risk-mitigating strategies that the average investor may not have or have access to without substantial capital. Due to private equity valuations and different exit strategies, these funds have earlier access to assets and therefore have greater potential profit margins. Whether in bull or bear markets, these funds have the ability to weather turbulence and in many cases still turn a profit. However, the gift of a bear market is that many asset prices are even lower than what some funds entered during a bull market.

Nevertheless, the crypto market remains open and public. Now more than ever, everyday investors face more opportunities and lower barriers to entry into cryptocurrencies. The presence of institutional players in cryptocurrencies is inevitable and almost necessary, but unlike the traditional financial world, there is still plenty of room for everyday investors to participate and succeed.