DeFi attracts huge amounts of money; GameFi & NFT on the rise: Report
According to a recent report, decentralised finance projects attracted the majority of investments from digital asset companies in 2022.
blockchain
Highlights
- Projects involving decentralised finance garnered a lot of financing in 2022
- A decline was noticed in initiatives relating to centralised funding
- GameFi, NFTs, and blockchain-related businesses also drew significant funding
In 2022, funding related to decentralised finance (also known as DeFi) grew by 190 percent compared to 2021. In contrast, investments in centralized funding (CeFi) fell by 73 percent to $4.3 billion.
Interestingly, total crypto funding dropped from $31.92 billion in 2021 to $18.25 billion in 2022 as the crypto market went from bullish to bearish.
Why is the DeFi sector growing?
The aforementioned report states that these numbers "may point to DeFi as a new fast-growing area of the crypto industry, while the decline in CeFi funding may indicate that the industry is reaching saturation."
The fact that the DeFi space is developing at a faster pace and that there are more on-chain participants are two factors contributing to the DeFi segment's growth. Conversely, the decline in CeFi funding may reflect industry saturation.
Last year, the largest DeFi funding came from Luna Foundation Guard's (LFG) billion dollar LUNA token sale. This happened almost three months before the May 2022 crash of Terra Luna Classic (LUNC) and TerraClassicUSD (USTC).
Speaking of centralized financial funding, FTX and FTX.US raised a total of 800 million euros in January 2022, which is a total of 18.6% of CeFi's funding last year.
It's interesting to note that the blockchain infrastructure, blockchain technology, and service sectors continues to garner favourable responses for funding in the cryptocurrency space during the past five years. Even GameFi and NFTs saw significant increases in investment in 2021.
The financing for the AI & Data sector increased by 65.1 percent year over year, which was another industry that experienced growth. Meanwhile, no increase was recorded in the mining industry and the social sector.
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