GCR

By Global Coin Research Team

Highlights

GCR is a research and investment community. As a collective, we source investments, conduct research and diligence, and make investments together.

This piece lays out some highlights from the 1st quarter of 2024:

• The GCR Community saw over 56 investment opportunities in Q1, of which ~80% came directly from community members and contributors.
• The only top category we invested in was once again Infrastructure.
• During Q1 2024, GCR invested in a total of 5 deals.
• GCR Core Team presents a Q1 macro review and shares our outlook for Q2 2024.

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Investment Appetite Revived

Q1 2024 Summary Stats

The GCR Community continues to make significant strides, demonstrating unwavering discipline in curating top-notch deal flow and forging partnerships with high-conviction companies.

• During Q1 2024, GCR assessed 56 deals, notably higher than in Q4 2023 due to the spike in interest. Specifically, approximately 80% of these opportunities were directly contributed by community members and contributors. This figure contrasts with the 70 investment opportunities observed in Q1 2023, where 40% were community-sourced.
• Q1 2024 started with a higher volume of deal opportunities due to increasing activities and improving sentiment in the crypto space.
• When categorizing the opportunities explored by the community, Infrastructure and DeFi/CeFi remain the most prevalent at approximately 62%, Web3 and Social Networks at around 30% and the rest covering various categories.
• Furthermore, the community solely focused on investments in the Infrastructure category during this quarter, similar to past Quarters last year.
• In alignment with the prevailing market sentiment and the selective approach of the GCR Community, GCR executed 5 deals in Q1 2024 – signing a confirmation of the upward trend.

Every quarter, we proudly share our progress to showcase the capabilities of GCR’s community-led investment platform. The GCR Community continues to grow stronger as members educate each other about their specific areas of expertise. If you would like to learn more about how you can be involved with the GCR Community, join our Discord.

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Break Of The 2 Year Downtrend of VC Investing

According to TechCrunch and PitchBook, over $2.5 billion has been raised across all crypto sectors this quarter, which is about 25% higher than the previous quarter. This draws parallels to the 4th quarter of 2020 or the beginning of 2021, the start of a massive influx. After two years of caution due to the steady decline of the crypto sector, multiple signs of optimism seem to emerge on the horizon.

Projects all over the spectrum are currently raising, from DeFi, over SocialFi to BTC Layer 2 with a mix of existing companies – that stayed lean throughout the past 2 years, and new projects emerging. SocialFi apps are attracting considerable attention, where Mask Network hit $100 million to support its ecosystem. So does the combined narrative crypto and artificial intelligence, such as Zero Gravity Labs (0g), which launched with a $35 million pre-Seed round.

This optimism is based on several factors on the regulatory landscape, such as the BTC-ETF approval, legal wins of Grayscale and Ripple but also the enthusiasm and activity on the Solana blockchain. It is expected to be a more sustainable phase, since there will be a lot of events that support this development, such as the launch of Blackrock’s tokenized money fund and expected interest rate cuts due to the upcoming elections. However, VCs were still cautiously optimistic, after the 2 years of difficult times for raising. It is worth noting, that the influx is still under the level of 2021, which still indicates a healthy caution of the market condition.

According to GlobalData, the overall VC space noticed an increase in deal activity in recent months, despite having a year-over-year decrease of 35% in terms of the value of capital deployed. It is noticeable that despite the decrease, activity in the US is still dominating with 25% in terms of deals and 42% in terms of value.

Our optimism about the crypto space, which we stated in the past reports is unchanged and confirmed.

Looking over the pond, digital Euro and Stablecoins are still a big topic, where commercial money tokens, wholesale digital Euro and Stablecoins are being further discussed, with banking groups planning on issuing their own Euro-denominated Stablecoins. According to Ledger Insights, The European Central Bank will be starting with wholesale DLT settlement trials to experiment with national and cross=border payments, the so-called interbank payments. See the recent GCR workshop explaining the topic here.

In the VC space, A total of $17.4 billion was raised by European Startups in Q1 according to PitchBook, with “mega-rounds” (transactions of €100 million or more) accounting for a volume of $8.8 billion. Investors became cautious in 2023 in their investment appetite, which picked up again during Q1. However, VC investors are looking more for quality over quantity, where they invest in a few companies instead of smaller amounts in more companies. Leading sectors in Q1 were financial services, healthcare and energy. The biggest portion was allocated to the UK startups with 26%, and Germany and France were with 16% each runner ups according to Crunchbase.

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GCR Portfolio Company Update

We have previously focused our quarterly reviews on highlighting our deal pipeline and funded investments, but since last quarter, we want to take the opportunity to showcase what some of our awesome portfolio companies have been building in the bear market.

GCR now has grown to over 78 portfolio companies that are relentlessly building, we are proud to be backers of these projects building the future of Web3.

Analog

Analog is a novel Layer-0 blockchain for event data in Web3, powered by Proof-of-Time.

Analog had a successful first quarter of 2024 with several highlights. They opened their Testnet for registration, raised over $16 million in funding led by Tribe Capital, and launched the Analog Partner Spotlight Series featuring Dmail and Cryfi. Additionally, Analog collaborated with CommonWealth on an investment round, launched a special TaskOn campaign during Valentine’s season, and celebrated reaching over 200k followers. Analog also had notable appearances at events like ETHDenver and Polkadot’s Sub0 speaking engagement by their Senior Security Engineer, Alp Onaran. Learn more here.

Gearbox Protocol

Gearbox creates and collects rewards for on-chain contributions.

Despite market volatility and concerns about depegs, Gearbox users remain safe, with no liquidations on the mainnet and only one on Arbitrum. The protocol is fully operational with no bad debt, ensuring passive side depositors earn yield without taking directional risks or experiencing impermanent loss. For more information on Gearbox security measures, visit their Twitter page. Learn more here.

Intella X

Intella X is a Web3 gaming platform that was started by Neowiz (a Korean gaming company) that partnered with Polygon and many other prominent companies in the Web3 space.

Intella X Quarterly Report 2024 Q1 Published! Learn more here.

LayerZero

LayerZero is a User Application (UA) configurable on-chain endpoint that runs a ULN.

LayerZero Labs has joined the Oasys Games ecosystem and HOME Verse, leveraging its omnichain capabilities to enable seamless, secure, and censorship-resistant data transfers across 50+ blockchains. This integration revolutionizes NFT minting and transfer by embracing the ONFT standard, eliminating traditional methods and enhancing interoperability. Together, they are facilitating seamless and interoperable NFT transfers between different networks, marking a significant stride in shaping the future of Web3 gaming. Learn more here.

Magic Eden

Magic Eden is the leading community-centric NFT marketplace.

Magic Eden Wallet users can now enjoy 0% trading fees in collaboration with BeFi Labs until May 15th. Additionally, users can claim extra BeFi points and have a chance to win a whitelist spot for BeFi’s upcoming Ordinals mint by connecting their ME Wallet. This partnership offers users exclusive benefits and incentives for utilizing the Magic Eden Wallet for trading activities. Learn more here.

Magic Eden have also just recently launched support for minting and trading on Base. Learn more here.

Morpho Labs
Morpho Labs is the most efficient and liquid protocol to supply and borrow assets on Ethereum.

The Morpho DAO Governance Forum proposes winding down low-usage assets on Optimizers, such as Compound V2 and Aave V2/V3, due to decreased usage and protocol deprecation. They plan to pause supply and borrow on these assets, deprecate CRV on Aave V2, and stop $MORPHO rewards on selected markets. Additionally, they suggest halving the total MORPHO rewards distributed to Optimizers’ users to incentivize migration to Morpho Blue, a venue for lending/borrowing on Ethereum, which has seen significant growth. These proposals aim to streamline governance and adapt to changes in asset usage and protocol evolution. Learn more here.

Crypto risk manager Gauntlet announced that it’s teaming up with Morpho to create its own lending products.

Mural

Mural makes it easy to manage real-time payments and invoices for employees, contractors, and vendors worldwide.

Mural offers an off-ramp service to convert $USDC to $EUR with several advantages including receiving funds via SEPA local rail in approximately one business day, offering better rates compared to Wise and Payoneer, and supporting both fiat and digital currency withdrawal. To get started, users can visit the Mural website. This service is highlighted at the Paris Blockchain Week 2024. Learn more here.

OAK Network

OAK Network is a Web 3.0 hub for DeFi and payment automation.

In March, OAK Network experienced significant activity, including expanding grant programs, participating in an AI & Web3 event at NVIDIA GTC, hosting the inaugural GameFi night for the OAK community, and enhancing community engagement on their blog. They approved the grant proposal for Bagpipes team’s project, aiming to develop a visualization tool for no-code interaction within OAK’s automation framework. The Automation Hub saw a doubling in daily automation task volume since its launch, indicating growing interest and adoption. OAK also showcased its potential role in AI at NVIDIA GTC 2024. Learn more here.

Passage Labs

Passage Labs is a team of enterprise integrators, innovation engineers, and data scientists with decades of experience future-proofing brands and companies to help enterprises merge legacy systems with modern, emerging technologies.

Check out the latest evolution of our data product, Puller AI.

 
prePO

prePO is a decentralized trading platform allowing anyone, anywhere to gain exposure to any pre-public asset.

prePO V2 has partnered with Privy.io to enhance user experience, offering passwordless login via email or SMS across browsers and devices, eliminating pop-ups during transactions, and implementing multi-factor authentication for enhanced security. Users can try out these features by visiting the PrePO website. Learn more here.

Sweat ?conomy
Sweat Economy is the original Move-to-Earn. The easiest way to walk into crypto.

$SWEAT makes a big move in Europe & is now listed on Europe’s top regulated exchange Bitvavo? Learn more here.

Talent Protocol 

Talent Protocol is a social and economic platform where builders can share their goals and find the support they need to achieve them.

Celebrate Builders Day and support onchain builders by minting the NFTs below, joining a movement dedicated to fostering innovation and empowerment in the blockchain community. Learn more here.

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Global Macro Outlook – New Era After Two Years

The cryptocurrency market experienced a shift to the beginning of the bull market with BTC at an All-time-high, Solana reaching $200 and ETH getting to $4,000. After two years of a steady decline, the signs point towards a massive shift. Catalysts of this shift are a mix of the approval of the BTC ETFs, legal wins of Ripple and Grayscale and also a continuation of the meme-season on the Solana chain, slowly swapping over to base. It is generally expected that this environment will persist throughout the year 2024 due to upcoming elections, a potential decrease in interest rates, positive legal outcomes and optimism that persists in the market.

Interest Rates – Economic Tailwinds Lead to Steady Cuts

Investors started the first quarter optimistic for a smooth economic path, hoping to avoid recession and see improving inflation prompting Fed rate cuts by March. Now, with the economy proving stronger than expected and inflation persisting, rate cuts are delayed until June at the earliest. Initial expectations of five rate cuts in 2024 have dwindled to a possibility of three, according to Morningstar.

According to BNP Paribas, it is expected that interest rates remain steady with more cautious cuts due to robust growth in the US, but with caution on the development of Inflation. Paired with upcoming elections, it remains unlikely to increase rates but rather a slow decline.

In Europe, rate cuts might be more probable due to the steady stabilization of the energy sector that leads to high inflation in the Eurozone.

Looking at Emerging Markets, rate cuts especially in LATAM economies should continue, whereas Asia might be more conservative in rapid cutting.

Coinbase predicts that macroeconomic factors will significantly influence crypto markets post-halving of Bitcoin. These external factors can outweigh the impact of halving events on cryptocurrency prices. They highlight the correlation between Bitcoin and traditional assets like stocks, particularly during periods of market uncertainty. Also the importance of regulatory developments can shape crypto market dynamics increasingly. Institutional adoption of cryptocurrencies due to growing concerns about inflation and currency devaluation is likely to increase as a continuous process of diversification. 

BTC-ETF Approval

The successful launch of the BTC-ETF on Jan 10 was a massive success bringing crypto again on the table and creating an incredible influx of capital into the ETFs of about $55 billion, according to CoinGecko. BlackRock’s Bitcoin ETF alone accumulated over $17 billion in BTC and became the 2nd largest BTC ETF after Grayscale. Watch our workshop regarding the BTC-ETF and some thought experiments here.

It’s important to consider that after the halving, mining rewards may reach between $30 million and $50 million daily. Comparing that to the potential demand from BTC-ETFs, which could be as high as $150 million daily, there might be a chance of temporary scarcity of BTC supply, according to Bitfinex.

Crypto And AI – A Perfect Couple

Crypto and AI share more than some people thought. Through decentralization, AI tools can be trained efficiently without one company owning all the data and simultaneously having access to a vast amount of data. So AI within the crypto space is a hot topic and big VCs like Polychain, Ritual and Hack VC have raised significant amounts to invest heavily in related projects, according to CoinDesk and CoinTelegraph.

The Continuous Emergence of SocialFI

As mentioned above, SocialFi has seen recurring high interest with the fundraisings of Mask Network and the awaiting V2 of Friend.tech. Farcaster, built on Optimism, approaches the look and feel of a Web2 experience – mobile-first, no wallet, no crypto – a different approach to Lens or Friend.tech. That could lead to more adoption of crypto apps without requiring too much Web3 knowledge.

Recap Q1 2024 Euphoria in the Crypto Space

Some highlights from the Coindesk Digital Asset Recap:

• Over the past three months, Bitcoin (BTC) grew by 68% reaching a new All-Time-High (ATH) of $73,000.
• Centralized Exchanges (CEXes) recorded the highest volume for the top 10 coins since December 2021 settling at $4.29 trillion in volume and a whopping +93.5 quarter-on-quarter increase, with Binance remaining the largest CEX profiting from new token launches and listings.
• Ether (ETH) did not reach an ATH yet, but its earnings tripled in Q1 by accumulating $1.2 billion in revenue from fees, according to CoinTelegraph. Ethereum’s share Decentralized Exchanges (DEX) trading volume fell below 40% in the last quarter hitting an All Time-low of 30% market share temporarily. However, it hit a record of $70 billion in trades in March.
• Other chains/rollups, like Arbitrum, launched an incentive programme to incentivise trading activity, even surpassing Ethereum’s trading volume temporarily. As soon as the program ended, activity plummeted ending with a 8% market share. Other trading spikes on base and Solana were due to the meme boom.
• The Top 10 Solana Memecoins grew by 800% and ended the quarter with a market cap of over $9 billion.
• NFT trading volume across the top 10 marketplaces stood at $4.7 billion, with Magic Eden (a GCR Portfolio Company) leading in market share.

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Join Us

We continue to be excited about what lies ahead of 2024 for GCR and the rest of the crypto community.

If you are a startup raising capital and are interested in learning more about what it is like to have the support of a community with thousands of members, please reach out to one of our GCR Core Team Deal Leads!

If you are a Web3 enthusiast and are interested in learning about new crypto projects, investing alongside sophisticated members, and sharing investment opportunities, hop into our Discord and join the conversation.

As part of our effort to onboard the next one billion users to crypto, we are giving away complimentary 1-month Gold memberships to people who are aligned with GCR’s core values and are seriously interested in investing with us. If you are interested, please fill out this form here.

Please reach out if you have any questions, comments or feedback! We welcome the dialogue.

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[This article has been written and prepared by the GCR Team, a group of dedicated professionals with extensive knowledge and expertise in their field. Committed to staying current with industry developments and providing accurate and valuable information, GlobalCoinResearch.com is a trusted source for insightful news, research and analysis.]

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Disclaimer: Investing carries with it inherent risks, including but not limited to technical, operational and human errors, as well as platform failures. The content provided is purely for educational purposes and should not be considered as financial advice. The authors of this content are not professional or licensed financial advisors and the views expressed are their own and do not represent the opinions of any organization they may be affiliated with.