Luca Prosperi, CEO of M^0 Labs, expects continued investment in AI infrastructure, middleware, and applications as the technology develops.
Despite a sluggish summer in the cryptocurrency market, venture capital (VC) investments are beginning to rebound. DeFiLlama data shows that crypto VC funding rose to $633 million in August, reflecting a 15% jump from the $550 million recorded in July, suggesting renewed investor confidence despite recent market challenges.
Photo: DefiLlama
VCs Shift Focus to Blockchain Infrastructure
Luca Prosperi, CEO and co-founder of M^0 Labs, a payments protocol bridging on-chain and off-chain transactions, observes a significant shift in VC focus towards blockchain infrastructure development firms. He anticipates this trend to continue, with investments flowing across different layers of the blockchain ecosystem.
“Given the early stage of development,” Prosperi explains. “We anticipate continued investment at various levels: the infrastructure level, the middleware level, and the application layer itself, where everything can be reimagined as it was during the late 1990s and early 2000s.”
The rise in interest in blockchain infrastructure highlights its essential role in advancing the technology. The recent spike in investment, particularly in August, hints at a possible shift in VC interest, with cryptocurrency making a comeback after losing attention to the artificial intelligence (AI) sector.
Crypto Steals Back Attention from Overcrowded AI
VC activity in the crypto space started to wane in favor of AI-related startups earlier this summer, particularly in June. During that period, Sentient, an open-source AI platform developer, secured a hefty $85 million funding round led by prominent venture capitalists like Peter Thiel’s Founders Fund, Pantera Capital, and Framework Ventures.
However, the tide seems to be turning. As Prosperi observes, “with the AI sector approaching saturation, some deep-tech investors are returning their focus to crypto, partially driven by the perception of a more favorable regulatory environment – a narrative that, to be fair, lacks concrete evidence”.
While blockchain infrastructure is attracting significant VC interest, the technology still lacks a widely adopted, real-world use case that could trigger mass adoption. Ganesh Swami, CEO and co-founder of Covalent, a blockchain data platform, emphasizes the need for more practical applications to draw VC interest towards the application layer.
Swami highlights the potential impact of approving the first Bitcoin and Ether-based exchange-traded funds (ETFs) as a major catalyst for the renewed VC interest shifting back from AI to the blockchain space.
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