Coinbase Ventures To Make The Shift From CeFi To DeFi

The investing arm of crypto exchange Coinbase is known as Coinbase Ventures, which has made investments in a number of different crypto projects.

It recently announced that it is shifting from centralized finance and moving towards decentralized finance (DeFi).

Deals decline

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The recent announcement from the company disclosed that its deals in the second quarter of the year had recorded a drop of 34%.

According to the company, this was not a reflection of its own performance because it was because of the bearish market and the turmoil that seems to be ongoing in the crypto space.

However, this did not stop Coinbase Ventures from investing in infrastructural projects, which offer utility and are part of the booming Web3 gaming space.

The decline in deal activity was compared with the deals it had made in the second quarter of last year. As far as the quarter-over-quarter decline is concerned, the deals fell from 71 to 47.

However, the year-on-year performance showed that the deals stood strong at 68%. Moreover, Coinbase venture disclosed that the broader venture market had begun to see a decline in the first quarter of 2022.

This is because it was the first time since the second quarter of 2019 that Coinbase Venture saw funding come down, which resulted in less investments.

High volatility

Coinbase Ventures elaborated that the high volatility of the crypto market was one reason for the decline in the number of deals. It had pushed investors to rethink, or they had put their funding rounds on hold.

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In addition, a number of investors had opted to continue their investment in companies that had shown a significant amount of growth, as this could help justify the investment.

The confidence that people have in a project usually determines the level of investments it can get from venture capital.

According to Coinbase Ventures, there had been a significant decline in investor confidence in the crypto market because of the high volatility, thereby taking a toll on the number of deals made in the second quarter of the year.

Real utility investments

Even though the crypto market has had a gloomy outlook, this has not stopped Coinbase Ventures from investing in projects that are capable of offering real utility.

This is evident from the venture arm’s investment in the Web3/protocol and platform & developer tool, which make up 38% and 21% of the investment it has made in total, respectively.

Other than Web3 infrastructure, Coinbase Ventures has also chosen to venture into the blockchain gaming sector which has become quite popular.

Furthermore, it also addressed the fall in user activity that has been seen in Axie Infinity of late and clarified that security issues were the reason behind it.

It also reassured us that the situation would not affect the entire sector, since it was able to raise a whopping $2.6 billion for it in the second quarter.

Now, it appears that Coinbase Ventures is moving towards projects in the decentralized finance (DeFi) space.