In the market situation where multiple projects have successively ceased operations and Eastern capital is at a loss, are the "a16z" making high-profile appearances and frequent moves to bottom out the encryption industry?

Written by: Sharon, Lucy, Jaleel, Joyce, BlockBeats

Edited by: Jack, BlockBeats

![Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 1](https://static.aicoinstorge.com/attachment/article/20230925/169560490488923.jpg "Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 1")

Since the deep bear market in the second quarter of this year, the investment strategies and scale of major VCs in the encryption market have been shrinking. According to incomplete statistics from BlockBeats, in the past few months, the number of financings in the encryption field has remained at around 10 per week, while last year, this number was around 30 per week, and at its peak, there were even 60 financings in a week.

However, at the end of the third quarter, some first-tier encryption VCs became active again. Taking a16z as an example, in just over a week, it consecutively led investments in 4 encryption projects, with a total financing amount of 76.6 million US dollars. It seems that the "a16z" have started bottoming out in the encryption industry.

What has the encryption market experienced in the past six months without the "a16z"?

The industry leader a16z is no exception. According to incomplete statistics from BlockBeats, in 2022, a16z participated in a total of 58 investments in the encryption field, with the highest total amount of financing in projects it participated in in March 2022, exceeding 2.1 billion US dollars. At the same time, the highest investment led by a16z in 2022 was given to Yuga Labs, with an amount of 450 million US dollars.

However, after entering 2023, its investment frequency and amount showed a downward trend. In the first quarter of 2023, a16z completed 13 investments, and the total amount of financing for projects it participated in decreased by 86.7% compared to the same period last year. The highest amount led by it was 150 million US dollars, given to the AI startup Character.AI. The highest leading investment amount decreased from 4.5 billion in 2022 to 1.5 billion in 2023. The extent of contraction is evident.

![Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 2](https://static.aicoinstorge.com/attachment/article/20230925/169560491948559.jpg "Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 2")

In the second quarter, a16z entered a relatively quiet period. From April to August, a16z only completed 4 leading financings, including 29.3 million US dollars in seed round financing for the on-chain IP infrastructure Story Protocol, 43 million US dollars in Series A financing for the blockchain-based AI computing protocol Gensyn, 20 million US dollars in Series A financing for the open-source software security solution Socket, and 16.5 million US dollars in seed round financing for the generative AI tool Ideogram AI.

In the past second quarter, the encryption VCs can be said to have experienced a "withdrawal tide." In addition to a16z, Paradigm also modified its official website information at the end of May, claiming to be a "research-driven technology investment company" rather than a company specifically investing in "disruptive encryption/Web3 companies and protocols," seemingly indicating an exit from encryption.

Institutions with the attribute of "spiritual leader" in the industry successively faded out of the market, and the industry gradually entered a chaotic stage of memes and wild dogs.

In March, Arbitrum's airdrop opened a brief and grand wealth creation movement for the currency circle. Legendary stories of "creating thousands of accounts," "obtaining hundreds of thousands of tokens," and "suddenly becoming free" spread widely once again. The community suddenly entered an era of mass airdrop participation, and the daily active users of zkSync and StarkNet increased by more than 10 times.

After a brief period of mass airdrop participation, the BRC20 season took over. In May, the BRC20 token Ordi's price broke through 10 US dollars, and its market value exceeded 200 million US dollars, creating a FOMO atmosphere in various communities. Compared to airdrop participation, the wealth creation effect of BRC20 tokens seems to be easier. Users do not need to participate in on-chain operations, nor do they need to worry about not meeting strict conditions. They only need to mint tokens at the time of issuance, and even in the early days of the Bitcoin chain when it was not congested, they only need to pay a few U in gas fees to obtain a large number of Ordi tokens.

In the BRC20 era, memes also did not show weakness and took turns to appear. A meme token named PEPE quietly went online and rose thousands of times in just four days. The myth of sudden wealth made PEPE famous, and the successive surges of PEPE once again brought meme coins and dog coins to the main stage of the encryption market. In a few days, dozens of meme coins were born, with gains of tens of times, causing half of the market to revel in the myth of wealth creation and the other half to continue to be anxious in FOMO.

Returning to the recent hot public chain Base. Without relying on an "odyssey" or airdrop for publicity, the Layer2 network Base launched by Coinbase ignited the market with a meme myth of a thousandfold increase in the price of BALD, attracting countless eyeballs and achieving a roughly 2000-fold increase in about 14 hours.

![Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 3](https://static.aicoinstorge.com/attachment/article/20230925/169560492638452.jpg "Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 3")

But just over 3 hours later, BALD revealed its fangs to destroy everything, as the project team suddenly withdrew a total of 8660 ETH and 179 million BALD in liquidity within 7 minutes, achieving a RUG. Interestingly, some on-chain detectives believe that SBF or the mastermind behind BALD.

Are the "leading sheep" coming to bottom out?

On the other side of chaos, some people are leaving the scene in dismay. Since the beginning of this year, multiple projects have announced dissolution and closure successively, and the speed of projects ceasing operations is increasing, from an average of 1 project ceasing operations per month to an average of 5 per month. In September alone, 4 projects successively announced closure, including the NFT platform Voice, the DeFi project Gro Protocol, the DeFi project Fuji Finance, and the DeFi and NFT trading robot None Trading, most of which ended due to "insufficient funds."

The reason for "insufficient funds" may be seen from an article published last week by Jocy, the founder of IOSG, one of China's largest encryption industry venture capital institutions. After the end of the TOKEN 2049 conference, Jocy pointed out in the article that the cold air brought by the bear market may make it difficult for many project teams to survive until the end of this year, and also pointed out that current encryption industry investment institutions are more inclined to tighten their belts.

In stark contrast to the Asian market, the "leading sheep" from Western encryption investment institutions have returned to the lively scene of the market.

Following Paradigm's change of its official website homepage description to "research-driven technology investment company" and the removal of any content related to cryptocurrencies in May, just over a month later, Paradigm reversed this change and announced its return to the cryptocurrency field. Paradigm co-founder Matt Huang stated that the previous removal of all mentions of cryptocurrencies from its website login page was "a bit absurd, a mistake." He emphasized that Paradigm will not give up its investment in cryptocurrencies.

After returning to the cryptocurrency industry, Paradigm immediately entered the "most turbulent" MEV market, participating in Flashbots' $60 million Series B financing completed in July, leading to a valuation increase of over $1 billion. In addition to Flashbots, what has been more impressive about Paradigm in the past few months is its selection and investment in friend.tech, which has quickly become a Web3 social newcomer with a market value of over $100 million in just two months.

![Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 4](https://static.aicoinstorge.com/attachment/article/20230925/169560493125620.jpg "Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 4")

In addition to investments, Paradigm's official website blog has become unusually active. In July, Paradigm released a "Collaborate with Paradigm" announcement, expressing a desire to collaborate with more outstanding talents in the cryptocurrency field and calling on entrepreneurs or projects in the seed or Series A financing stages to fill out a form to introduce their projects to Paradigm.

Yesterday, Matt Huang published another lengthy article, not only refuting the overly speculative and slow development pessimism about Crypto from another perspective but also expressing confidence in the future of Crypto.

With Paradigm's high-profile return, a16z has also regained its vitality.

As can be seen from the figure below, from April to July this year, a16z seemed to have fallen silent in the entire second quarter, with an average of only 1 investment per month. However, starting in August, a16z seemed to have become active again, increasing from 2 investments in August to 5 in September, equivalent to the total for the past few months. And in the latter half of September alone, a16z consecutively made 4 investments within 10 days.

![Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 5](https://static.aicoinstorge.com/attachment/article/20230925/169560493343840.jpg "Leading 4 projects in a week, are the "a16z" starting to bottom out the encryption industry? aicoin Figure 5")

On September 12, a16z led a $15 million Series A financing for Pahdo Labs, a metaverse platform development studio. On the 18th, a16z led a $25 million seed round financing for Bastion, a startup providing cryptocurrency custody and other services. On the 20th, a16z led a $3.6 million seed round financing for Freatic, a decentralized information market protocol, and the next day, it led a $33 million seed round financing for Proof of Play, a blockchain gaming startup.

In the market situation where multiple projects have successively ceased operations and Eastern capital is at a loss, the high-profile appearances and frequent moves of the "a16z" seem to be bottoming out in the encryption industry.

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