A report by RootData revealed that funding for Web3-based firms hit $9.13 billion as of December 31, 2023, with November alone accounting for $1.312 billion, becoming the highest single financing month of the year. The report underscores the diverse geographical spread of investments in Web3, noting substantial funding and contributions from prominent financial institutions and venture capital entities.
Although these statistics might seem positive, 2023 was not a good year for Web3 firms regarding funding, as most companies fell out with big investors. However, the first quarter of 2024 is taking a different turn as data from Crunchbase‘s Web3 tracker indicates that Web3 firms have surpassed the $1.8 billion mark in funding before the end of Q1, 2024.
Web3 companies increasingly turn to grant initiatives to foster innovation and drive growth. Unlike traditional funding methods, grant initiatives offer unique opportunities for Web3 firms to expand their impact within the digital ecosystem. However, encouraging innovation requires resources, support, and conducive environments for experimentation. This is where grant initiatives play a pivotal role.
In light of this, notable Web3 projects have announced various grant projects promoting innovation in cryptocurrency. Notable among these grants were those offered by leading blockchain foundations, such as the Ethereum (ETH-USD) Foundation, Polkadot (DOT-USD) Grants Program, and Solana (SOL-USD) Foundation.
These grants aimed to support projects spanning various domains, including decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized applications (dApps), and blockchain infrastructure development.
Axelar, a UX-based Web3 company, recently revealed a $25,000 grant project that supports Mainnet’s launch of Web3-based projects. Avalanche also launched the Ted Yid grant fund that advocates for the development of open-source software projects building on the Avalanche (AVAX-USD) network.
1inch, a decentralized exchange aggregator, also has its grant project, the 1inch Foundation Grant Program—a $3,000,000 million funding plan that focuses on product development, security, and interoperability, distributed as 1INCH tokens.
Balancer (BAL-USD) has also made public the Balancer Grants program ($5k-100k USD, paid in BAL), which promotes the development of the Balancer protocol. Additionally, Coinwen has unveiled the Coinweb Labs’ Grant Programme, which offers 500 million CWEB tokens as grants to nurture promising projects on Coinweb.
In a comparable action, Magic Square —a Web3 app store backed by Binance (BNB-USD) Labs, has launched an Ecosystem Grant Programme to promote project development on its platform. The project offers $66 million worth of $SQR tokens, translating to 12% of its total supply.
Andray Nayman, Co-founder and CEO of Magic Square, echoed this move, stating, “With a community of over 3.6 million wallets and more than 1,200 apps and games on our platform, we’ve established a robust foundation for developers to connect with a broad audience. Our grant program is designed to enhance our support and further contribute to the success of our partners.”
How Grant Projects are Fueling Web3’s Innovation
Grant projects drive Web3 innovation by providing entrepreneurs, developers, and researchers with crucial resources and support. Furthermore, they foster collaboration and knowledge-sharing within the Web3 community, promoting best practices for collective advancement.
Unlike traditional centralized systems, Web3 operates on decentralized networks where participants have equal access and control over data and resources. This decentralized nature eliminates intermediaries, reducing barriers to entry and promoting inclusivity. Moreover, blockchain technology ensures transparency, immutability, and trust through cryptographic principles, enhancing accountability and reliability in collaborative efforts.
For instance, a few months ago, the Fuse network unveiled the Fuse Web3 Business Grant program, backed by a $10 million fund. The grant establishes a specialized funding reserve designed to aid initiatives enhancing the capabilities of non-custodial wallets, DeFi) and NFTs.
Mark Smargon, CEO of the Fuse Network, emphasized the importance of grant programs in the growth of Web3 space, stating, “As ecosystem builders, we must spark enthusiasm for new technology and attract developers even during market downturns.” This sentiment signifies the pivotal role of funding in Web3 development.
The Next Wave in Web3 Funding
The Web3 market is projected to be valued at $5.5 billion by 2030, up from $0.4 billion USD in 2023. Growth of this magnitude requires elaborate resource mobilization. One of the major drivers of such efforts is grant projects.
With more blockchain-based solutions gaining traction across various industries, investors are increasingly turning their attention to Web3 projects that demonstrate tangible utility and real-world impact. Grant funding in Web3 is expected to prioritize initiatives that focus on privacy, security, scalability, and usability, as they are crucial for advancing the Web3 infrastructure.
