In August, crypto funding was down by 30% to $1.9 billion, compared to $2.67 billion in July, according to the DeFiLlama data.
The level of venture capital (VC) funding, even after the decline was constant, partly owing to the $600 million raised as a result of PUMP public sale.
DeFi Projects and AI Gain Traction
In August, DeFi projects, especially in the infrastructure and trading platforms, attracted a significant amount of investments. This contributed to the increase in the total amount of funds financed in the third quarter to $4.57 billion that exceeded $4.54 billion of Q2 with two months to spare. Some other protocols that were heavily funded, on top of DeFi, were artificial intelligence (AI) protocols. It is worth noting that throughout the month, Everlyn raised more than 15 million dollars, and several projects in the AI sector at the seed stage were supported.
Source: DefiLlama
Cybersecurity had its turn as well, with IVIX raising a $60 million Series B, the biggest conventional VC round of the month. Stablecoin infrastructure came in with Rain in close second, growing 58m. Projects in payment infrastructure, including the OrangeX series B of $20 million, were also in the spotligh,t especially payment solutions across border and merchant payment solutions.
Lower Valuations Leading to Market Stability
According to the market analyst Daan Crypto Trades, investors started focusing on open projects with robust treasury companies instead of opening new chains. He pointed out that such a change is also helping to achieve a more stable price performance of newly listed tokens. Red prices on new launches are currently a major element in preserving price stability, something that Daan Crypto considers a good move towards the projects as well as the investors. The reason he considered this trend was that it would result in more stable market growth.
South Korea Lifts VC Funding Ban for Crypto Firms
South Korea has also just repealed a long-standing ban on VC funding of crypto businesses, in a major policy shift, which will take force on September 16. It is based on the acceptance of an amendment to the Enforcement Decree by the Ministry of SMEs and Startups. Crypto exchanges and brokerage under the new framework will cease to be classified as a restricted venture business, which will enable them to tap into venture capital. The action is part of wider attempts by South Korea to control and commercialize the crypto market, as in recent years, licensing regimes and consumer protection regulations were established.
The government wants to favour technological development in the crypto industry and open up opportunities to blockchain and cryptography-based firms. It will be a more transparent and responsible ecosystem, and this new policy will aid crypto firms in getting the funding to be innovative.
Although total investments have dropped in August, the crypto market is still dynamic as VCs are actively supporting more established projects, and newer areas such as AI and cybersecurity. The recent regulatory development in South Korea also shows a greater acceptance and encouragement of the crypto industry globally.
