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The cryptocurrency sector has been in recession over the past few months. However, this recession has not affected the interest of venture capital firms in the sector. Venture capital inflows into the crypto space have continued to skyrocket despite the market dips.
Huobi Global, one of the largest digital asset exchanges globally, has unveiled a new investment division that focuses on decentralized finance (DeFi) and Web3 initiatives. The new fund joins the list of venture capital initiatives in the crypto space.
Huobi Global commits a $1B fund to DeFi and Web3
The new investment arm by Huobi Global is known as Ivy Blocks. The division has more than $1 billion in assets under management that will be deployed to targeted projects. The company noted that the funds had been set aside for “identifying and investing in promising blockchain projects.”
The DeFi and Web3 projects selected for this initiative will benefit from the funding and access to various services that will assist the projects in achieving success. These services include an asset management platform, a dedicated research unit, and a blockchain incubator.
Lily Zhang, the chief financial officer at Huobi Global, said that the firm’s asset management division would offer liquidity investments to support DeFi and Web3 projects that want to commence their operations.
The first project to receive funding under Ivy Blocks is Capricorn Finance. This is an automated market maker built on the Cube blockchain. Other projects are expected to follow suit and benefit from the wide array of services this platform offers.
The focus of Ivy Blocks in the DeFi sector comes at a crucial time. Over the past month, the DeFi sector has recorded a notable decline in the total value locked (TVL). The entire DeFi TVL currently stands at around $133 billion. This is a massive decline, given that in December 2021, the DeFi TVL stood at $316 billion.
The woes suffered by the DeFi sector stem from the rumored crypto winter that has dominated the sector since the beginning of 2022. Market analysts have noted that perks come from the current bear markets. Analysts have said that bear markets are healthy because they are formed after an “irrational” period when the asset prices increase significantly.
The DeFi sector suffered a massive blow following the collapse of Terra LUNA. Terra was one of the largest blockchain sectors, and before its collapse, it ranked as the second-largest blockchain network by TVL. The blockchain crash lowered investor confidence in the DeFi sector, and DeFi coins have suffered an intense blow over the past few months.
Venture capital funds continued to pour into crypto
Venture capital funds into the cryptocurrency sector have continued to increase despite the notable losses made by the entire sector. The current global cryptocurrency market is at around $1.3 trillion, a massive decline from the $3 trillion value reached in November last year.
The two sectors that venture capitals have turned their attention towards include the metaverse and Web3. These two areas have remained at the top of the most-funded projects by venture capital firms because activities in the area have continued to skyrocket.
During the first quarter of 2021, projects related to research, blockchain, and crypto received $14.6 billion in capital investments. The investments happened despite investor anxiety that the market was declining. The Q1 funding is significantly high, given that in 2021, venture capital investment into crypto was around $30.5 billion.
Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.