venture capital company, Fundamental laboratories launched its Fundamental Labs Fund V – the fifth in its series of funds that began in 2016. It was built in one month with an average size of $50 million. Fundamental Labs’ investment philosophy is rooted in being a long-term strategic value investor. Short-term speculation is not its approach and therefore remains independent of the phase.
Looking forward to 2022it plans to launch another new fund with a decently sized AUM of $200 million to further encompass the exciting Web3.0 application and infrastructure project which it sees as key areas for investment.
With 2021 being a pivotal year for the global digital asset market and Web 3.0 ecosystem, the Fundamental Labs team has seen an incredible combination of talent and capital flow in this space. While all-time highs (ATH) have been printed in the crypto markets, several trends have captured even more attention.
Digital assets have become one of the hottest alternative investments lately. Coinbase, the largest U.S. cryptocurrency exchange and one of Fundamental Labs’ portfolio companies, made its public market debut on Nasdaq in April. It was a watershed moment for digital asset investors, adding to the sense that the asset class has gone “mainstream”.
The emergence of NFTs, the Metaverse, and GameFi sparked a massive wave of innovation (and investment) in the underlying decentralized technology stack and “Web 3.0” evolved from an ambiguous buzzword to an inevitable trend that promises to change considerably for our work and our daily lives.
With more investment, more innovation, and with more innovation, the entire ecosystem will only grow, exponentially, as we head headlong into the future. This change is exciting and rich in opportunity, and Fundamental Labs will continue its mission to help entrepreneurs accelerate their fundamental innovation and mass adoption and will surf on some key themes in 2022:
- Web3.0 and Crypto
Web 3.0 is the next phase in the evolution of the Internet. It aims to be a decentralized version of the virtual world, where users can intelligently interact and collaborate without worrying about central Web 2.0 servers. To make the evolution of the web more inclusive and less biased, blockchain technology will be a fundamental resource to focus on.
- NFT Mania
“NFT” was ranked as the most trending Google search in 2021. NFT, or Non-fungible tokens, took the world by storm in 2021. Non-fungible token (NFT) trading volume exceeded $13 billion, according to The Block Research. This figure represents a massive 42,988% increase over 2020 NFT transaction volumes.
NFTs aren’t just about showing ownership of a single PFP, or digitizing and tokenizing artworks like Beeble’s “Everyday: the first 5,000 days”.the scope of NFTs has expanded to include music, games, sports, and any digital or real-world asset – which can be tokenized while retaining value and providing a unique property in the metaverse.
The rise of metaverses has kept NFTs in the spotlight, having spawned a new breed of real estate investors seeking to grab digital land through non-fungible tokens. A blue NFT chip is Decentralized ($MANA), an investment made by Fundamental laboratories in 2017, which continues to hold its first-mover advantage from NFT to a thriving metaverse. To kick off 2022, electronics giant Samsung opened 837X, a virtual replica of its 837 flagship store, in the heart of Decentraland.
The demand for NFT is insatiable and offers creatives and rights holders new avenues to protect their intellectual property and create value. Initially, the NFT space was the domain dominated by Ethereum, fueling much of the development. However, as NFTs prosper, they are no longer limited to the Ethereum chain for success, as we have seen a number of our holding companies with diverse protocols built on other Layer1 chains prosper:
- mint base
The watershed moment for NFTs that have followed the metaverse narrative is through GameFi protocols.
- GameFi: Play to Win
GameFi is the intersection of DeFi and Play-to-Earn (P2E) blockchain games inside the Metaverse. GameFi embraces the cost savings that become possible by transferring ownership of assets to players and incentivizing greater loyalty, engagement and positive management of these gaming communities – thereby changing the types and rules of games.
Axie Infinity’s Play-to-Earn (P2E) model, paired with Guilds, is the real game changer.
The traditional games market in 2021 generated total revenues of $180.3 billion, so even 10% of the traditional “pay-to-play” or “play-to-win” model is moving to “play-to-earn”. will bring great benefits to Web 3.0 Users. We are very optimistic to see traditional game players joining the GameFi craze. Below are some recent investments supported by Fundamental Labs that follow this trend:
- NASH Metaverse
- Ajuna Network
The advent of GameFi led to the take-off of the Metaverse in 2021, which is a great merit of preparing the Web3.0 infrastructure. If we compare the state we are in with Web 3.0 with the era of DApps (circa 2018) – most DApps have failed. In hindsight, this failure was the result of the difficulties in building something of value when the ideas were so far ahead of the supporting infrastructure. But that’s the natural course.
- infrastructure stack
The “multi-chain” narrative was strong in 2021 and could span all of 2022 as various Layer 1 blockchain and Layer 2 scaling solutions emerged to address the issues of scalability that have historically plagued Ethereum.
Fundamental Labs is an advocate for multi-chain to increase the scalability of the blockchain as a whole, the layer 1 wallet is comprehensive including NEAR, Avalanche, Polkadot, Kusama, Stacks, Nervos, Conflux, PlatON,Binance Coinetc
Decentralized storage is an infra niche of Web3.0 at the intersection of Metaverse and Web 3.0. The main current decentralized storage solutions are IPFS/Filecoin and Arweave.
Despite market turmoil in early 2022 and the prospect of the Fed removing stimulus, Fundamental Labs maintains an active and positive outlook on the market and continued growth in the above trends. There is no perfect time, and as such Fundamental Labs is quick to do
investments when opportunities arise. In the first week of the New Year, he has already closed a few new deals. Others that the partners are watching more closely for new investments in the near future include:
Web social networks recent investments in RSS3 and SOCOL have great synergy with its existing Web 3.0 portfolio ecosystem: Steem, Theta, Brave (BAT), Dora Factory (DORA), Status (SNT)as good as Mask Network (MASK).
2021 presented some interesting DeFi2.0 projects like Abracadabra, Convex, Olympus and Tokemak. Compared to DeFi 1.0, the total value locked in DeFi 2.0 is still low, but with better funding models tied to Protocol Control Value, this dynamic should change. Fundamental Labs started 2022 with investments in Treehouse, Neptune Mutual, and Zecrey
Over the course of 2021, we’ve seen DAOs become more mature and mainstream. DAOs are a new coordination layer that will eventually replace the traditional model. A DAO is an internet-native organization with core functions that are automated by smart contracts and with people doing things that automation cannot (eg, marketing, software development).
The Future of Work Isn’t Corporate – It’s DAOs and Web3.0 Networks
One of Fundmental Labs’ portfolio companies, SuperDAO, is an operating system for DAOs. SuperDao OS maintains real-time status of DAO ownership, including tokens, NFTs, future equity pledges, allocation plan, governance structure, and custom roles.
“The future is already here, it’s just not evenly distributed” .
The promise of Web 3.0 is endless play. New technologies such as crypto assets, Web Social, DeFi, NFT, Metaverse and DAOs support the free flow of users, identity, data and value, which facilitates collaboration and constitutes an open digital economy – and ultimately a fairer, more stable and sustainable society.
© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.