RootData: Q1 2026 Web3 Industry Investment Research Report

Author: RootData Research
Key Points

• In Q1 2026, the total financing amount in the crypto primary market was $4.59 billion, a decrease of 46.7% quarter-over-quarter. The total number of financing events was 170, a decrease of 14.2%.
• Monthly concentration was high, with March alone accounting for $2.58 billion (56.2% of Q1), and the median of $8 million is a core indicator reflecting the true market benchmark.
• DeFi surpassed CeFi for the first time with $2.083 billion, making it the leading sector, with both accounting for 68.4% of the total; infrastructure led in the number of events with 55 occurrences but had an average of only $14.31 million.
• There were 38 M&A events this quarter, with disclosed amounts totaling $2.302 billion (mainly BVNK at $1.8 billion), and 31 events with undisclosed amounts.
• Coinbase Ventures led the market with 12 investments; Franklin Templeton (4 times) emerged as a new high-frequency institution this season, signaling a clear systematic layout by traditional asset management giants.
• In terms of ecosystem financing, BNB Chain (17 events), Ethereum (14 events), and Solana (14 events) are in a three-way tie, with Base (9 events) showing the fastest growth, and Hyperliquid (6 events) being the biggest dark horse among emerging ecosystems.

Total Financing and Monthly Distribution

Overview of Web3 Primary Market Financing

In Q1 2026, the total financing amount in the crypto primary market was $4.59 billion, with 170 investment events occurring, representing a quarter-over-quarter decrease of 46.7% and 14.2%, respectively.

The structural feature of "stable volume, explosive amount" at the monthly level is extremely prominent, with the number of events over three months being highly balanced (52→56→62 events), but the total financing amount surged from $926 million to $644 million and then to $2.58 billion, with a standard deviation of $840 million, reflecting the extreme pull of super projects in March on the overall data.

The average financing amount was approximately $36 million, which is 4.4 times the median financing amount ($8 million), revealing the extreme power-law characteristics of financing distribution this quarter: a few super-large projects raised the average financing amount, but the true financing level of the market should be based on the median.

Sector Financing Analysis

The sector landscape has undergone structural reshaping: DeFi surpassed CeFi for the first time with $2.083 billion (CeFi at $746 million), a reversal driven by two large financing events dominated by TradFi in the prediction market. Infrastructure ranked first in the number of events with 55 occurrences (32%), but its average was only $14.31 million—4.9 times lower than DeFi's average of $69.45 million, clearly revealing two distinctly different capital pricing logics.

DeFi: Prediction Market Leads the TradFi Wave

Among the 49 events in the DeFi sector, Kalshi ($1 billion) and Polymarket ($600 million) together accounted for $1.6 billion, or 76.8% of the total DeFi amount. Both financing parties are traditional financial institutions (Coatue Management / Intercontinental Exchange ICE), marking a structural shift in the DeFi application layer from VC-driven to TradFi capital-led.

The remaining 47 events had a total financing of $483 million, with an average of approximately $10.28 million, validating the dual-peak structure of the DeFi ecosystem: "top super narrative concentrated, bottom early projects dispersed." Superstate ($82 million/B round), as a representative of on-chain RWA money market funds, is a trend signal worth noting for differentiation within the top 10 DeFi sub-sectors.

CeFi: M&A Dominance Excluded, Pure Equity Financing Still Reached $746 Million

Excluding M&A, CeFi had 22 pure primary financing events totaling $746 million, with an average of $43.88 million, which is 0.63 times DeFi's average. Representative projects include: LMAX Digital ($150 million/Ripple investment), Eightco Holdings ($125 million/BTC reserve strategy), Anchorage ($100 million/Tether compliance custody), KAST ($80 million/QED + Sequoia China + DST Global).

The narrative core of the CeFi sector has shifted from "scale" to "compliance quality"—after BitGo's IPO established a compliance milestone, high transparency and regulatory-approved CeFi service providers have become the core targets for institutional capital.

Infrastructure: High Frequency, Low Amount, Leading in Events but Lowest Average

Infrastructure had 55 events (32% of all) and was the sector with the most events, but its average of $14.31 million was the lowest. This is not a reflection of capital abandonment but an objective mapping of its long commercialization path and verification cycle: VCs tend to run multiple small seed rounds rather than make a single high-valuation bet.

Notably, World (WLD) OTC financing ($65 million, the only OTC event this season) and Startale Labs ($63 million/Sony Innovation Fund) were the two largest in this sector, raising the overall average; excluding these two, the median in infrastructure is only about $5 million.

Financing Round Structure Analysis

Excluding M&A/debt financing/IPO/Post-IPO, the round distribution of the 170 events reveals a three-segment pattern of "early heat, mid-term cold, strategic activity": Pre-Seed + Seed totaled 52 events (30.6%) maintaining the highest frequency; A/B rounds totaled 21 events (12.4%) continuing to narrow, signaling cautious pricing for growth-stage project valuations.

Undisclosed (29.4%): The highest proportion of rounds within the season. Information concealment remains common, and RootData's transparency scoring continues to incentivize projects to disclose proactively.

Strategic financing (20.0%): Tether (8 times) and Franklin Templeton (4 times) are representatives, with the former completing the transformation of "stablecoin → strategic investor" identity, and the latter marking a century-old traditional asset management's systematic positioning in the crypto field.

A/B rounds accounted for only 12.4%: The "price discovery" function for growth-stage projects has not fully recovered, with funds concentrated at the very early high-risk end (seed rounds) and the low-risk end (strategic/M&A).

Special Round Analysis (Debt Financing / IPO / Post-IPO):

The following 7 events (2 debt financings / 1 IPO / 4 Post-IPOs) do not belong to standard primary equity financing and have been excluded from the main statistics, but their market significance cannot be ignored:

Metaplanet's two debt financings: The "Asian version of MicroStrategy" model has formed a demonstration effect among Japanese listed companies; if BTC prices remain high in Q2, there may be replicators of bond financing to purchase BTC.

BitGo IPO: The most important compliance milestone in Q1; the first public offering in the crypto custody industry, successfully pioneering a valuation path for "regulatory-friendly service providers," which may trigger accelerated listings or acquisitions of Anchorage/Paxos in Q2.

Most Questionable Financing Comes from Infrastructure

The financing transparency in the infrastructure sector is relatively weak: among the 4 questionable events, 3 belong to infrastructure, aligning with the sector's characteristics of "high frequency, low amount, early projects, and proactive low profile." It is recommended that institutional investors implement stricter independent due diligence verification processes for projects in this sector.

M&A Wave Special Topic

In Q1 2026, a total of 38 M&A events were recorded, accounting for 17.4% of the 219 original events. Among them, 7 disclosed amounts totaled $2.302 billion; 31 events had undisclosed amounts. The concentration of the M&A wave is the most direct evidence of the crypto industry transitioning from "barbaric growth" to the "integration into the mainstream financial system" phase.

Highly concentrated amounts: Among the 7 disclosed M&As, BVNK ($1.8 billion) accounted for 78.2% of all disclosed M&A amounts, while the remaining 6 totaled $502 million, which is highly consistent with the power-law characteristics of primary financing.

Acquirer profile: Traditional financial institutions (Mastercard, Mirae Asset) and crypto-native institutions (Fireblocks, Nakamoto, Coincheck, GSR) each accounted for half, with both forces completing the integration positioning of the crypto ecosystem from different angles.

Sector preference: Among the 31 undisclosed M&As, the tools & information services category had the most occurrences, suggesting that the integration actions of compliance data tools, on-chain analytics, and developer tools far exceed the scale presented by public information.

The acquisition of Farcaster is the most noteworthy narrative twist this quarter, possibly indicating that the decentralized social application layer has entered a consolidation phase.

Q2 M&A Forecast: If regulatory clarity continues, the M&A ratio in Q2 is expected to further increase to 20%. Key M&A targets will focus on:

1. DeFi protocols with real revenue (acquired by TradFi platforms);
2. Compliance payment protocols (acquired by banks/payment giants);
3. Institutional-grade custody service providers (IPO or acquired by large exchanges). Market maker acquisitions (GSR/Autonomous model) may also accelerate further after the Jane Street controversy—acquiring on-chain market-making capabilities through M&A rather than building them in-house is the cost-optimal path.

Ecosystem Financing Distribution

Note: When the same project is deployed in multiple ecosystems, it is counted separately, and the total across ecosystems exceeds 170 financing events.

• BNB Chain leads: The Binance Alpha incentive flywheel continues to drive, with YZi Labs having a high overlap in 4 investments.
• Ethereum and Solana are tied for second: Ethereum focuses on institutional-grade DeFi and RWA projects; Solana is driven mainly by high-frequency trading, meme ecosystem spillover effects, and on-chain prediction markets.
• Base is rising the fastest: A large portion of Coinbase Ventures' 12 investments flowed into the Base ecosystem, with the deployment density of consumer applications on Base being the highest among all L2s.
• Hyperliquid: An on-chain derivatives trading ecosystem, its high performance and on-chain order book model attract a large number of DeFi structured product projects, making it the biggest dark horse among emerging ecosystems this quarter.

Most Active Investment Institutions

Coinbase Ventures led as the most active institution in Q1 2026, with significant concentration among top players; however, institutions with 5 or fewer investments are becoming more homogeneous, with many small and medium institutions parallelly laying out early opportunities.

The biggest structural change at the institutional level this quarter: Franklin Templeton became an active institution for the first time, indicating that century-old traditional asset management has moved from "observation" to "systematic allocation" in the crypto sector.

Top 10 Financing Events in Q1

The total financing amount of the Top 10 was $2.537 billion, accounting for 55.3% of the total $4.59 billion for the season, with extreme power-law concentration characteristics.

Note: Kalshi and Polymarket both had financing records in Q4 2025 (each $1 billion, $2 billion), and Q1 2026 represents additional financing after both received a new round of strategic support, showing that the valuations of leading prediction market projects are still rapidly rising.

Financing Amount Range Distribution

Among the 119 disclosed amount events, the average of $36 million and the median of $8 million show a huge gap (4.4 times), which is the most intuitive quantitative manifestation of power-law distribution. The first two brackets (<$10 million) account for 60.5% but contribute less than 5% of the total for the season; only 2 events exceeded $500 million (Kalshi + Polymarket) totaling $1.6 billion, accounting for 38.6% of the total.

The median of $8 million is the most representative market benchmark for this quarter: it reflects the actual funding level most projects received after removing extreme values and is a more reliable reference for institutions to assess "market heat."

RootData Transparency Construction: Systematic Assurance of Data Credibility

This report strictly categorizes data (accurate vs questionable, primary financing vs M&A vs other rounds), stemming from RootData's systematic promotion of transparency initiatives in Q1. Five measures form a positive feedback loop of "data collection → scoring incentives → multi-party verification → institutional credibility → industry standardization":

In Q1, out of 219 events, 215 (98.2%) were marked as "accurate," with 4 questionable (1.8%)—of which 3 were concentrated in the infrastructure sector with weak information disclosure, highly aligning with the sector's characteristics.

Among the 38 M&A events, 31 (81.6%) had undisclosed amounts: this is the largest data gap for this quarter and also the key focus for RootData's data co-construction plan in Q2. Project parties and acquirers are welcome to supplement M&A amount information through official channels to enhance the transparency of industry M&A data.

The market maker roadshow plan will directly impact the transparency ratings of CeFi/DeFi projects in Q2; the industry concerns triggered by the Jane Street incident align closely with the timing of RootData's actions, and it is expected to accelerate the industry's acceptance of market maker disclosure standards.
It is recommended to use RootData's transparency A/B rating as a precondition for early investment screening—high transparency project information asymmetry risks are significantly lower, and due diligence efficiency and post-investment management costs can be substantially optimized.

Outlook for Q2 2026

Data from Q1 2026 indicates a clear window for industry consolidation, and institutional investors should focus on leading players in compliance custody, payment protocols, and DeFi infrastructure in segmented sectors. M&A cases in Q2 are expected to concentrate on compliance payments and institutional-grade custody.

The DeFi application layer is also worth attention, as Kalshi and Polymarket set a precedent for TradFi financing in the prediction market, while sectors like derivatives protocols, on-chain options, and structured products as "on-chain financial infrastructure" will become key areas for systematic layout, while continuously tracking the operational trends of the Hyperliquid ecosystem fund in Q2.

Investors can focus on tracking targets from active institutions like Coinbase Ventures, Tether, and Dragonfly, but must make comprehensive judgments in conjunction with RootData's transparency A/B rating. Additionally, BNB Chain, Solana, and Base, as the three most active ecosystems in Q1, remain the main battleground for capturing liquidity token pricing opportunities, while also being cautious of VC lock-up period release risks.

This report is produced by RootData Research, and the information or opinions expressed in this report do not constitute investment strategies or advice for anyone. View other formats: PDF version | Medium