Blockchain Industry Development Monthly Report: The financing market showed a shrinking trend in June, with the amount of financing falling by more than 42% from the previous month

Report editor: Bai Liang, Yu Baicheng

Executive Editor: Jiang Zhaosheng

Data support: Yan Xiaomei

Written by Chen Lishan

summary

In order to better understand the development status of the global blockchain industry in June 2021, 01 Blockchain and Zero One Think Tank have comprehensively displayed the development trends of the blockchain industry from the dimensions of blockchain investment and financing, mainstream encrypted digital currency trends, the latest policies, domestic industry dynamics and global news.

The global blockchain investment and financing market intensified its downward trend since March in June 2021. There were 111 financing events in a single month, down about 30% from the previous month, and the financing amount was US$2.246 billion, down more than 42% from the previous month. The average financing amount per transaction in a single month fell for the second time in nearly half a year. From the perspective of financing rounds in June, seed angels exceeded 33%, and strategic investments ranked second. In the blockchain investment and financing track in June, there were 40 digital asset-related transactions, accounting for 36%, exceeding the technical facilities & solutions track. The cryptocurrency and Defi tracks continue to be hot.

From the perspective of the domestic market: on the policy side, blockchain development is supported, but cryptocurrency speculation is restricted. On June 7, 2021, the Ministry of Industry and Information Technology and the Central Cyberspace Affairs Office issued guidance on accelerating the application of blockchain technology and industrial development; Shanxi Province's "14th Five-Year Plan" 14 strategic emerging industry plans involve blockchain; on June 21, the central bank interviewed some banks and payment institutions on virtual currency trading speculation. On the industrial side, the China Payment and Clearing Association issued a risk warning, and illegal and criminal activities using virtual currencies and other forms have gradually increased; all mining farms in Sichuan have been collectively cut off from power. Bitmain stopped selling spot mining machines and fully transferred them overseas.

From the perspective of the international situation, the European Central Bank stated that countries that do not introduce digital currencies may face threats to their financial systems and monetary autonomy; on June 9, the Legislative Assembly of El Salvador formally voted to pass a bill to make Bitcoin a legal tender; HSBC joined Dubai Economy's UAE KYC blockchain platform.

From the perspective of technical dynamics, the crowd-lending function of Karura parachain of Polkadot DeFi platform Acala's pioneering network has now been opened; Ethereum has passed the stress test of the test network Ropsten; Bitcoin ABC version 0.23.7 ​​has been released; NFT index fund NFTX released version V2, adding a new specific NFT redemption function.

Judging from the performance of the capital market, the cryptocurrency market has been hot this year, and most of the top currencies have seen an increase in market value. Driven by the public chains of major exchanges, the platform coins of major digital currency exchanges, including BNB, have seen an astonishing increase, with BNB having increased by more than 653.71% since the beginning of the year.

1. Overview of global blockchain investment and financing

According to incomplete statistics from 01Blockchain, there were 111 financing events in the global blockchain-related industry in June 2021, of which 93 disclosed specific financing amounts, with a total financing amount of more than US$2.246 billion (based on the real-time exchange rate on July 5). Specifically:

1. The financing market showed a contraction trend in June

Judging from the global blockchain-related financing situation in the past six months, before the beginning of 2021, the average number of financing events per month was around 60-70, rising to 233 financing events in March 2021, and then gradually returning. There were 111 financing events in June. From the perspective of total financing, the largest financing amount in the past six months was US$392,549,440 in May, and fell to US$224,608,280 in June.

Figure 1: Trends in the number and amount of blockchain investments from October 2020 to June 2021

Data source: 01 Blockchain, Zero One Think Tank

According to the projects with publicly disclosed financing amounts, the average financing amount of a single project in each month was reported to be US$24.1515 million per case in June 2021. This data is the second time that the average financing amount has declined in the first half of the year. Compared with the huge decline of US$44.2553 million per case in January, the decline in June was more moderate.

Figure 2: Trend of average financing amount per transaction per month from October 2020 to June 2021 (Unit: 10,000 USD)

Data source: 01 Blockchain, Zero One Think Tank

2. Seed and angel investors accounted for over 33% of the total, with strategic investment ranking second

In terms of financing rounds, seed angel and strategic investment were the main forms of financing in the blockchain field in June, accounting for 33% and 30% respectively. Round A financing took place 21 times in June, accounting for 19%.

Figure 3: Distribution of blockchain investment and financing rounds in June

Data source: 01 Blockchain, Zero One Think Tank

3. Million-level financing performed outstandingly, accounting for 49%

Although the average financing amount of a single project in June was as high as 24.1515 million US dollars, among the projects that have disclosed their financing amounts, 45 financing events of millions of US dollars occurred, accounting for 49%, and 37 financing events of tens of millions of US dollars occurred, accounting for 40%.

Figure 4: Distribution of blockchain investment and financing amounts in June

Data source: 01 Blockchain, Zero One Think Tank

4. The United States continues to lead in financing, accounting for nearly 30%

The number of financings in June decreased by 50 from the previous month. Among them, the United States led the way with 35 financings in a single month, 3 more than the previous month. The number of financings in the United Kingdom and China was 9 and 8 respectively, which was basically the same as the previous month. In addition, the number of financings in the blockchain industry in most countries in June was 1, such as Japan, Israel, Poland, Italy and other countries.

Figure 5: Regional distribution of global blockchain investment and financing events in June (unit: transaction)

Data source: 01 Blockchain, Zero One Think Tank

5. The cryptocurrency market is booming, with digital assets accounting for 36%

With reference to the blockchain industry classification standards of multiple institutions such as the Token Research Institute and the Information Center of the Ministry of Industry and Information Technology of China, and combined with 01 Blockchain's own experience, we divide the blockchain industry into three categories: blockchain underlying layer and infrastructure (underlying layer), extensibility technology and solutions (extension layer/data layer), and industry applications (application layer). On this basis, it is further subdivided into more than 10 secondary categories, including blockchain underlying protocols, blockchain hardware and services, extensibility technologies, digital currency-related, financial application-related, physical application-related, and industry supporting services. Each major category is further subdivided into more than 100 tertiary categories.

From the primary classification point of view, industrial application projects and expansion technology and solution projects performed excellently in June.

From the perspective of secondary classification, the digital currency-related track in application projects is still hot, with a total of 111 projects receiving capital investment; followed by digital asset-related and basic technology facilities & solution service providers/platforms, which also became capital-favored tracks in June, with 40 and 33 projects receiving financing respectively. In addition, 17 and 13 projects in financial application scenarios and physical application scenarios received financing respectively, and 5 projects in other on-chain applications received financing.

Figure 6: Distribution of major blockchain investment and financing tracks in June

Data source: 01 Blockchain, Zero One Think Tank

From the perspective of the three-level segmentation scenarios, cryptocurrency and DeFi-related projects were very popular in the financing market in June, with 34 and 20 projects receiving capital investment respectively; at the same time, cryptocurrency trading, data services, NFT, cryptocurrency wallets and other tracks also achieved impressive performance in June.

Figure 7: Distribution of blockchain investment and financing segments in March

Data source: 01 Blockchain, Zero One Think Tank

2. Global cryptocurrency public opinion and market performance

1. Public opinion heat

According to data from Google Trends and Baidu Index, Bitcoin has remained the focus of public attention both domestically and globally since the beginning of 2021, with a popularity far higher than the other four categories. Ethereum ranks second, significantly higher than the other three categories. In May this year, Bitcoin's popularity suddenly soared globally, which may be related to China's tightening of its cryptocurrency policy in the first half of May, which led to a sharp drop in the prices of Bitcoin and Ethereum.

Figure 8: Trends in search popularity of related keywords worldwide (as of July 6, 2021)

Data source: Google Trends

Figure 9: Trends in the search popularity of domestic related keywords (as of July 5, 2021)

Data source: Baidu Index

2. Market performance

Since the beginning of 2021, the overall performance of the A-share market has been positive, with a return rate of about 2.5%. Among them, the Hang Seng Index, London Gold Spot, London Silver Spot and BSV are negative, and the rest are positive. From the perspective of the global capital market, the overall performance has been stable and improving since the beginning of this year. Most of the major global stock indices have achieved positive returns. Among them, the increase in US crude oil since the beginning of the year has reached 55.12%, and the Austrian ATX has also achieved a return of 25.05%.

In addition, the overall cryptocurrency market has continued to be hot this year, and most of the top currencies have seen a sharp increase in market value, and their overall strong performance is still far superior to the mainstream capital market. BTC, the worst performing of the top 15 in market value, has also achieved a 24.10% increase this year, higher than most mainstream assets; while BNB, the best performing, has increased by 653.71% since the beginning of the year; LTC has also increased by a high of about 263.80%; in addition, XRP and ETH have both increased by more than 100%.

Figure 10: Comparison of performance of digital currency and traditional capital markets (as of June 30, 2021)

Data sources: 01 Blockchain, Zero One Think Tank, CoinMarketCap, Choice

3. Overview of global news

1. Domestic policy orientation

[Two departments: Accelerate the promotion of blockchain technology application and industrial development]

On June 7, the Ministry of Industry and Information Technology and the Central Cyberspace Affairs Commission issued guidance on accelerating the application of blockchain technology and industrial development. The opinions proposed that by 2025, the comprehensive strength of the blockchain industry will reach the world's advanced level and the industry will take shape. Cultivate 3-5 backbone enterprises with international competitiveness and a group of innovative leading enterprises, and create 3-5 blockchain industry development clusters. The blockchain standard system is initially established. By 2030, the comprehensive strength of the blockchain industry will continue to improve and the scale of the industry will further expand. Blockchain has become an important support for building a strong manufacturing country and a strong network country, developing a digital economy, and realizing the modernization of the national governance system and governance capabilities. The "Guiding Opinions" deployed two key tasks. The first is to give full play to the role of blockchain in optimizing business processes, reducing operating costs, and building a trusted system. Focus on the real economy fields such as supply chain management, product traceability, and data sharing, promote the integration and application of blockchain, and support the digital transformation of the industry and the high-quality development of the industry; the second is to promote the application of blockchain technology in government services, evidence storage and evidence collection, smart cities and other public service fields, accelerate application innovation, and support the transparency, equality, and precision of public services.

[The central bank interviewed some banks and payment institutions regarding virtual currency trading speculation, and Wuxing and Alipay subsequently announced a ban on virtual currency trading]

On June 21, the People's Bank of China officially issued a statement saying that recently the relevant departments of the People's Bank of China have summoned some banks and payment institutions such as Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China, Industrial Bank and Alipay (China) Network Technology Co., Ltd. to discuss the issue of banks and payment institutions providing services for virtual currency trading speculation.

Relevant departments of the People's Bank of China pointed out that virtual currency trading speculation activities disrupt the normal order of the economy and finance, breed risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe on the property safety of the people. All banks and payment institutions must strictly implement the "Notice on Preventing Bitcoin Risks" and "Announcement on Preventing Token Issuance and Financing Risks" and other regulatory provisions, earnestly fulfill customer identity identification obligations, and shall not provide account opening, registration, trading, clearing, settlement and other products or services for related activities. All institutions should comprehensively investigate and identify the capital accounts of virtual currency exchanges and over-the-counter dealers, and promptly cut off the payment link of transaction funds; analyze the capital transaction characteristics of virtual currency trading speculation activities, increase technical investment, improve abnormal transaction monitoring models, and effectively improve monitoring and identification capabilities; improve internal working mechanisms, clarify division of labor, consolidate responsibilities, and ensure that relevant monitoring and disposal measures are implemented in place. Subsequently, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China, Industrial Bank and Alipay announced a ban on providing services for virtual currency transactions.

[Shanxi Province's "14th Five-Year Plan" 14 strategic emerging industry plans involve blockchain]

On June 23, Shanxi Province issued the "14th Five-Year Plan for 14 Strategic Emerging Industries in Shanxi Province", proposing to strengthen and expand four pillar emerging industries, including information technology application innovation, semiconductors, big data, and carbon-based new materials. The big data industry includes strengthening the construction of information infrastructure such as 5G base stations, big data centers, and blockchain-based data platforms, and laying out pilot areas for digital infrastructure construction and pilot areas for efficient circulation of data elements.

[Digital RMB will be piloted at the Winter Olympics]

On June 23, Li Lihui, head of the blockchain research group of the China Internet Finance Association and former president of the Bank of China, said that the digital RMB pilot is progressing smoothly and has now been expanded to 10 cities. According to Li Lihui, during the Winter Olympics, the use of digital RMB should be possible in scenarios such as entry and exit points such as Beijing, Shanghai, and Guangzhou, the hotel service industry, and the Winter Olympics venues. Li Lihui said: "I am still confident that the Winter Olympics will be a touchstone for the digital RMB."

2. Domestic industry/institutional dynamics

[China Payment and Clearing Association: Illegal and criminal activities using virtual currency and other forms are gradually increasing]

On June 9, the China Payment and Clearing Association issued a risk warning, stating that the use of virtual currency and other forms of illegal and criminal activities has gradually increased. Because of its anonymity, convenience and global nature, it has gradually become an important channel for cross-border money laundering. At the same time, a model of using virtual currency as a gambling point-running medium has emerged. The main method is: gamblers pay funds to point-runners, point-runners pay virtual currency to gambling platforms to complete bets, and finally the dealer uses virtual currency to exchange cash back to the point-running platform or virtual currency acceptor. Statistics show that nearly 13% of gambling websites support virtual currency platform recharges, using the anonymity of blockchain technology to cover up the gambling fund transfer path through a large number of C2C transactions, increasing the difficulty of tracing the capital chain.

[Bitcoin and other mining machines were collectively cut off from power, and Sichuan closed all mining farms]

At midnight on June 20, all mining farms in Sichuan were collectively cut off from power, and Bitcoin miners who were unable to relocate in time suffered huge losses. Sichuan is the largest gathering place for Bitcoin miners in China and even in the world, with about 8 million loads being used for cryptocurrency mining. A few days ago, a notice on the closure of virtual currency mining projects in Sichuan circulated online. The document showed that all cities (prefectures) were required to complete the identification, cleaning and closure of 26 suspected virtual currency mining key projects in the province before June 20, and at the same time required power generation companies to immediately stop supplying power to virtual currency mining projects and report self-inspection and rectification before June 25. In addition, the governments of all cities (prefectures) were also required to conduct a dragnet investigation and immediately shut down any mining projects found.

[Bitmain stops selling spot mining machines and moves all its mining machines overseas]

On June 22, Bitmain told miners that due to the recent influx of second-hand machines into the market, Bitmain temporarily stopped selling spot machines in order to ease the pressure on customers to ship. In addition, Bitmain has announced a full overseas transfer, and some mid- and senior-level employees are moving overseas. The rumors that Bitmain has cut orders for 5nm chips due to the recent price drop are untrue. Due to the sharp drop in the computing power of the entire network, the shutdown price of S19 is already below US$7,000.

[Ant Chain launches blockchain high-speed communication network BTN, which can be accessed in Shanghai, Singapore and other places]

On June 23, at the 2021 Ant Chain Developer Conference, Ant Chain released the blockchain high-speed communication network BTN (Blockchain Transmission Network). It is reported that BTN is a communication acceleration network for blockchain built by global service nodes. The network has the characteristics of supporting large-scale communications, global nearby access, ensuring communication quality, real-time transaction support, low network cost, and security and reliability. At present, the network has been applied in the global financial application chain and digital identity application chain. At present, BTN has set up "high-speed intersections" in cities such as Shanghai, Zhangjiakou, Hong Kong, Frankfurt, and Singapore, which means that blockchain platforms in China, Western Europe and Southeast Asia can choose nearby access.

3. International News

[ECB: The financial system and monetary autonomy of countries that do not introduce digital currency may be threatened]

On June 2, the European Central Bank warned that countries that decide not to introduce digital currencies could face threats to their financial systems and monetary autonomy. In a report released on Wednesday, the ECB said that in regions without their own digital currencies, consumers and businesses may end up relying on a small number of dominant payment service providers, including foreign technology giants. The ECB said this could affect the ECB's ability to fulfill its mission and act as a lender of last resort. "Issuing a central bank digital currency would help maintain the autonomy of domestic payment systems and the international use of money in the digital world," the report said.

[El Salvador's Legislative Assembly officially voted to pass the bill to make Bitcoin a legal currency]

On June 9, Salvadoran President Nayib Bukele sent a proposal to Congress to make Bitcoin a legal tender in El Salvador for a vote, and tweeted that afternoon that the proposal was passed by Congress with an overwhelming majority of 62 votes to 84 votes. The bill reads, "The purpose of this law is to make Bitcoin an unrestricted legal tender with free power, unrestricted in any transaction, and executable by any public or private, natural or legal person." This legislation will take effect in 90 days. Bitcoin will be used as legal tender in El Salvador and will no longer be subject to capital gains tax; business activities such as transactions, taxation, and wages will be completed using Bitcoin. In addition, users who hold three or more Bitcoins can obtain permanent residency in El Salvador.

[Sotheby's: Auction of five physical CryptoPunks, the current highest bid for a single one is $138,700]

On June 26, according to Sotheby's, five physical CryptoPunks were auctioned at Sotheby's on June 25 and will last until July 1. CryptoPunks were launched by Larva Labs on June 23, 2017, and were initially available to anyone with an ETH wallet for free. There are a total of 10,000 CryptoPunks, each with its own unique characteristics. The 24 x 24 pixel, 8-bit style punk embodies an aesthetic that reflects the nostalgic punk spirit. There are 24 physical CryptoPunks, signed by John Watkinson, founder of Larva Labs. Each of the 24 physical CryptoPunks comes with a sealed envelope containing a private key, also known as a "paper wallet," which, when opened and accessed, gives ownership of the CryptoPunk asset. Currently, the CryptoPunk numbered 872 has the highest bid of 100,000 pounds, or about 138,700 US dollars.

HSBC joins Dubai Economy’s UAE KYC blockchain platform

On June 27, according to GulfNews, Dubai Economy and HSBC strengthened the UAE KYC (Know Your Customer) Blockchain Alliance, and HSBC became the fourth founding member of the platform. The UAE KYC Blockchain Platform is a national ecosystem for exchanging verified "Know Your Customer" data between licensed institutions and financial institutions. The program was launched by Dubai Economy in February 2020 in cooperation with founding member banks. The platform includes members such as Emirates Islamic Bank, Emirates NBD, Commercial Bank of Dubai, Abu Dhabi Commercial Bank, HSBC, RAKBANK and Mashreq Bank, as well as Dubai Economy and DIFC.

4. Latest crypto projects/technical developments

[Polkado DeFi platform Acala’s Karura parachain crowd lending function is now open]

On June 9, the Polkadot DeFi platform Acala announced on Twitter that it has launched the parachain crowd-lending function. Users can now participate directly through the Acala official website (minimum locked amount is 0.1 KSM), Polkawallet (minimum locked amount is 1 KSM), Kraken, OKEx, Maizi, Fearless and other channels. The Acala team said that in the first three days of the crowd-lending, all participants will receive an additional 10% early bird reward. As of now, the total locked amount of Karura has exceeded 73,000 KSM, the total locked value has reached 30 million US dollars, and the total number of participants has exceeded 2,000.

[There are no problems with the stress test of Ethereum test network Ropsten, or stress test other test networks]

On June 27, Ethereum developer Tim Beiko updated the stress test results of Ethereum test network Ropsten, and there were no problems. Tim Beiko introduced the chart and said that after Ropsten was upgraded to London, the initial value was set to 1 gwei, the large peak was the stress test, and the spam was turned off afterwards. In addition, Tim Beiko said that other test networks may be stress tested.

【Bitcoin ABC 0.23.7 ​​version has been released】

On June 29, Bitcoin ABC announced that version 0.23.7 ​​has been released, which has made some network improvements and is compatible with eCash. Earlier news said that BCHA will be renamed eCash and will be split according to 1 BCHA = 1,000,000 XEC. Bitcoin ABC will officially change its name to eCash at 12 PM (GMT) on July 1, and the name will be changed from BCHA to XEC.

[NFT Index Fund NFTX releases V2 version, adding a new NFT redemption function]

On June 29, the NFT index fund NFTX officially released the V2 version, which is currently in the testing phase. The V2 version will run with V1 to allow orderly inventory migration. New features of the V2 version include custom qualified modules for Vault (such as using on-chain metadata), the ability to redeem specific NFTs at an additional fee (5% premium), LP holder smart contracts to collect protocol fees from Vault turnover, tokenized inventory supply (xTokens) and vToken (Vault token) flash loans, and common changes include each portfolio incentivizing a single Vault, encouraging meme-friendly and cashtag-able asset codes, and replacing Fund with Vault at the terminology level.