<div class="watcher-guru"> 
 <p>2021 was a fruitful year for the DeFi market. The ecosystem witnessed significant capital inflows amid heightened user interest. From January’s $15.3 billion, the total value locked on all protocols climbed to a high of $175 billion by November. </p> 
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  <img decoding="async" width="738" height="373" src="data:image/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==" alt="" class="wp-image-103936 ewww_webp" sizes="(max-width: 738px) 100vw, 738px" data-src-img="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp" data-src-webp="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp.webp" data-srcset-webp="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp.webp 738w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp.webp 550w" data-srcset-img="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 738w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 550w" data-eio="j"> 
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   <img decoding="async" width="738" height="373" src="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp" alt="" class="wp-image-103936" srcset="https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 738w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/b57439737209cf6544c2752e915237ca.webp 550w" sizes="(max-width: 738px) 100vw, 738px"> 
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  <figcaption class="wp-element-caption">
    Source: DeFiLlama 
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 <p>2021 was also one of the best years for the broader crypto market. With Bitcoin creating double peaks, a host of other large and mid-cap assets created all-time highs. Amid the hype and hoopla, around $2.6 billion was invested in around 800 companies. In this article, we will be analyzing how these organizations have been faring. </p> 
 <p><strong>Also Read: India: BlackRock, Jio to Launch Digital Asset Venture</strong></p> 
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 <h3 class="wp-block-heading" id="h-are-defi-projects-under-delivering">Are DeFi projects under-delivering? </h3> 
 <p>Crypto venture <a rel="noopener noreferrer nofollow" title="funding" href="https://thebittimes.com/tag/funding.html">funding</a> firm Lattice recently published a report highlighting that one-third of the funded companies have initiated a follow-on round of venture <a rel="noopener noreferrer nofollow" title="funding" href="https://thebittimes.com/tag/funding.html">funding</a>, while 20% of the projects have shut down or stopped development. Chalking out the hit rate, Lattice’s report noted that 70% of projects have at least shipped a product to the mainnet or mainnet equivalent, while nearly 50% have launched a token.</p> 
 <p>DeFi projects, specifically, have been struggling to raise follow-on rounds. Less than 30% of projects have managed to raise more capital. In fact, the report highlighted,</p> 
 <p><strong>“Less than 75% of DeFi projects delivered a product to mainnet.”</strong></p> 
 <p>In 2021, the DeFi and Consumer/Web3 sectors received “the most <a rel="noopener noreferrer nofollow" title="funding" href="https://thebittimes.com/tag/funding.html">funding</a>.” However now, they are struggling at Product to Market Fit. <a rel="noopener noreferrer nofollow" title="PMF" href="https://thebittimes.com/tag/pmf.html">PMF</a> is one of the most recognized concepts related to startups. It means&nbsp;that creators have created a product or service that satisfies a market need. That eventually becomes evident through organic growth. </p> 
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 <p>Amid the ever-changing market conditions, a once-hot project with seeming <a rel="noopener noreferrer nofollow" title="PMF" href="https://thebittimes.com/tag/pmf.html">PMF</a> could suddenly lose its appeal. Building in crypto can feel a lot like “building a house on quicksand,” the report contextualized. The DeFi <a rel="noopener noreferrer nofollow" title="PMF" href="https://thebittimes.com/tag/pmf.html">PMF</a> currently stands at 3%. All other sectors, including CeFi, Consumer/Web3, and Infrastructure, have higher rates, hovering in the 4%-11% bracket. </p> 
 <p>As highlighted at the beginning of the article, the DeFi market registered a boom in 2021 and welcomed several new participants into its arena. However, from a funding perspective, 2021 was perhaps long-delayed. Bringing to light the “wrinkle,” the report highlighted,</p> 
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 <p><strong>“2021 might have been too late. If we take the current top 10 DeFi tokens by market cap, all of them were seeded in 2019 or earlier.”&nbsp;</strong></p> 
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   <img decoding="async" loading="lazy" src="data:image/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==" alt="" class="wp-image-103950 ewww_webp" width="463" height="313" sizes="(max-width: 463px) 100vw, 463px" data-src-img="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp" data-src-webp="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp.webp" data-srcset-webp="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp.webp 614w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp.webp 550w" data-srcset-img="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 614w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 550w" data-eio="j"> 
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    <img decoding="async" loading="lazy" src="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp" alt="" class="wp-image-103950" width="463" height="313" srcset="https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 614w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 300w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 380w, https://cdn.thebittimes.com/images/2023/07/28/357b256ed076b1105fa460c9605f4eff.webp 550w" sizes="(max-width: 463px) 100vw, 463px"> 
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     Source: Lattice 
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 <p><strong>Also Read: Sequoia Downsizes Crypto Fund by 66%: Here’s Why</strong></p> 
 <h3 class="wp-block-heading" id="h-bottom-line">Bottom Line</h3> 
 <p>Even though projects have shipped products at a rate that is at par with startup industry averages, DeFi <a rel="noopener noreferrer nofollow" title="PMF" href="https://thebittimes.com/tag/pmf.html">PMF</a> continues to be on a slippery slope. The depressed VC market conditions will make it demanding for projects to raise follow-on rounds if they have not been able to do so already. Certain narratives are still ‘hot,’ and could end up burning fingers. Amid the challenging early-stage fundraising market and valuation drops, researchers expect the shutdown percentage “to begin increasing very rapidly.”&nbsp;However, there is light at the end of the tunnel. The report concluded by stating,</p> 
 <p><strong>“Some teams will cut burn enough to hopefully get to better market conditions.&nbsp;We expect more teams to be going to market with bridge rounds in H2 2023.”</strong></p> 
</div> 
<div class="cs-entry__tags"> 
 <ul> 
  <li>defi</li> 
  <li>funding</li> 
  <li>PMF</li> 
 </ul> 
</div>

DeFi: Under 75% of Projects Funded in 2021 Have Delivered a Product

Table of Contents

TheBitTimes

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