Crypto VCs Return as Market Rallies

The venture capital (VC) landscape is experiencing a significant surge in activity as the crypto bull market roars back to life. On May 16, a prominent crypto venture firm, Aquarius, revealed the creation of a $600 million multi-strategy fund aimed at enhancing on-chain liquidity for blockchain foundations and ecosystem projects. In a statement to , representatives from Aquarius noted that this fund is backed by Bitrise Capital and various leading miners, family offices, and influencers.

This substantial $600 million fund is designed to support numerous aspects of the blockchain sector. It will aid projects focused on blockchain infrastructure, decentralized finance (DeFi), artificial intelligence (AI), the Bitcoin ecosystem, modular architecture, and early-stage data layer projects. Aquarius highlighted that this fund represents the first institutionalized effort of its kind to systematically manage on-chain liquidity, assisting numerous blockchain ecosystem projects in meeting their liquidity requirements.

Lin Yang, a venture capitalist, founded Aquarius in 2018 in Singapore. Yang has a history of backing notable projects such as Conflux and investing in emerging Web2 sectors, including new energy, advanced manufacturing, and finance. On May 8, the firm relocated its headquarters to New York, poised to expand its influence and operations in the crypto space.

As the crypto bull market gains momentum, significant funding is flowing into crypto ecosystem projects. On May 6, reported that crypto venture capital funding exceeded $1 billion for the second month in a row this year. In April, $1.02 billion was secured across 161 investment rounds, a slight dip from the $1.09 billion raised in March. This upward trend hasn’t been seen since the end of 2022, a sign of renewed investor confidence.

One notable funding event this month was the strategic round led by BlackRock for the digital securities platform Securitize, which raised $47 million. Key investors, including blockchain developers Aptos Labs and stablecoin issuers Paxos and Circle, participated. Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships, joined Securitize’s board of directors, calling the investment a significant move in evolving their digital assets strategy to meet future client needs.

Further illustrating the funding boom, Puffer Finance, a liquid staking project built on Ethereum’s layer-two solution EigenLayer, completed an $18 million Series A round in April. Investors like Coinbase Ventures and Kraken Ventures backed the project, which aims to lower the initial capital requirement for Ethereum validators to just 1 Ether, a significant reduction from the previously required 32 ETH. Puffer Finance’s protocol gained traction quickly, amassing over $1.4 billion in total value locked shortly after its February launch.

The market scenario has shifted drastically from the previous year. In September 2023, Tony Cheng, a partner at Singaporean crypto investment firm Foresight Ventures, advised projects to secure as much capital as possible to ensure survival. He emphasized that if projects lacked sufficient runway, they might struggle to find funding in the near future—a stark contrast to today’s bustling funding environment.

Bitcoin’s resurgence has been a crucial driver of this bullish phase. Since plummeting to below $16,000 following the fall of FTX in November 2022, Bitcoin has surged over 300%. This rise has been attributed to the approval of spot Bitcoin exchange-traded funds globally and the gradual repayment of funds to creditors affected by the FTX collapse. Some venture capitalists foresee that this bull market could trigger a wave of initial coin offering (ICO) activities, possibly surpassing the peaks of early 2018.