Coinbase Ventures Will Focus On DeFi After 34% Decline In Q2 Deals

Coinbase Ventures will focus on Defi after a 34% decline in the Q2 deals and said it will avoid centralized lending platforms so let’s read more today in our Coinbase latest news.

Coinbase Ventures reports show that the overall deal activity dropped along with the pessimistic sentiment that is taking reign on the broader market. The bearish market conditions did nto change the company’s investment thesis on the infrastructure projects which demonstrate real utility as well in the Web3 gaming sector. Coinbase Ventures will focus on DeFi as the deal activity was down 34% from 71 to 47 but it remained up by 68% year over year according to the Q2 investment memos. The investment giant noted that the slowdown in the broader market venture kicked in in Q1 and witnessed the first drop in funding since 2019.

Coinbase’s investing branch attributed a decline to high volatility which caused investors to rethink or put their rounds on pause and bet on companies that can show the growth needed to justify a new round. Despite the macro environment, Coinbase Ventures continue to invest in projects with utilities as it can be shown in the Web3 protocols like Platform and Developer Tool which account for 38% of the total investments. In addition to Web3 infrastrcuture, the gain invested in the blockchain gaming sectors as Web3 game developers that started embracing the new category.

Regarding the sheer decline of user activity in Axie Infinity due to the security concerns and CV believed it will not drive the whole sector down as it raised $2.6 billion in the second quarter despite the unfavorable market conditions. In terms of layer one investments, Coinbase Ventures showed a preference for Solana with the developers using it as a coding language. The growing momentum is reflected in EVM developers transitioning to Solana.

Given that centralized lenders made headlines in the past few months for the risky practices bringing down the entire market the company said it will focus on investmetns in the DEFI protocols instead. While most troubled centralized companies are facing insolvency due to mismanagement from defi protocols like Compound, Aave, and MakerDAO all performing well amid the violent volatility on the market.

Compared to the bear market previously, Ventures has profound innovations like NFT and Defi and more that have real applications beyond CryptoKitties. It is also believed that the industry can survive the winter despite the harsh conditions.