Messari: Which crypto assets are most favored by top funds?

This article is sourced from Conan Insight, authored by Charles.

Among thousands of crypto assets, there are hundreds of token projects with a circulating market cap exceeding 50 million USD. At least a hundred token projects have a market cap over 500 million USD, and dozens are unicorns. Smart money investors—venture capital funds, hedge funds, and mercenary liquidity providers—are betting on DeFi, NFTs, Web3, and the metaverse across different industries, at various stages of growth (ranging from below 50 million USD to over 1 billion USD).

We tracked many top venture capital (VC) firms and hedge funds and recorded their liquidity portfolios (assets traded in the market). Of course, this may miss equity investments or investments in networks that have yet to be born.

Overall analysis shows that a total of 44 funds have 225 unique assets across different fields, including smart contracts, DeFi, Web3, scalability, interoperability, and NFTs.

Top Fund List

MessariPro provides access to the complete community filter list, including VC portfolio filters for: Multicoin, Pantera, Paradigm, ParaFi, Three Arrows Capital, etc. There are also the following crypto funds:

A16z

Alameda Research

Arrington XRP Capital

Binance Labs

Dragonfly Capital

Electric Capital

Fabric Ventures

Framework Ventures

Fenbushi Capital

Galaxy Digital

Kenetic Capital

LedgerPrime Capital

The public nature of these portfolios and the availability of most crypto assets ensure that both institutions and retail investors can participate in the action (and possibly lose together).

II. DOT Has the Most Fund Allocation Besides BTC and ETH

Messari conducted an asset distribution analysis in April, with a total of 35 funds. The top 7 held assets are:

Polkadot

Keep Network

Uniswap

Compound

Filecoin

Maker

Nervos Network

The July Messari investment filter analysis: larger scale, heavier assets

After analyzing all portfolios, we found that the highest asset invested in the 44 funds we track is Polkadot (DOT). In fact, 19 of the 44 funds hold DOT, meaning that 44% of our tracked funds have a vested interest in DOT's success.

Note that we assume these funds mostly hold Ethereum and Bitcoin, so they are omitted from our analysis.

III. LUNA Ranks Second, NEAR Third

In the portfolios we track, the second most popular asset is Terra (LUNA)—an algorithmically controlled, minting-style stablecoin platform. By the end of the second quarter, Terra users had locked assets worth 2.2 billion USD in its two applications: Mirror Protocol and Anchor Protocol. Undoubtedly, Anchor Protocol also ranks among the top 35 in recent growth.

The third most invested company is the smart contract platform Near Protocol (NEAR) and Oasis Network (ROSE). Both are smart contract platforms, but so far, their adoption is not as high as competitors like SOL, ETH, and Avalanche.

The equal-weighted return of the above-listed portfolio is +77% YTD, with Solana and Terra performing the best in the portfolio at 1569% and 958%, respectively.

IV. Diamonds in VC Investments

We also created a Messari filter showing these assets (sorted by market cap).

Among the 35 assets with more than 6 unique venture or hedge fund investors, Radicle, Lido DAO, Oasis, DODO, and Balancer maintain the lowest circulating market cap. Interestingly, Lido DAO is one of the derivative assets in the top investment asset list (also including PERP and SNX), while Radicle is one of the Web3 projects reflected in the most invested list.

However, it is important to note that circulating market cap can sometimes be misleading, and it is also crucial to consider the highly diluted value of these assets. Tokens with highly diluted value need to be able to grow continuously to match their valuation.

A notable trend is that venture capitalists clearly see the large accessible market size within the smart contract and DEX sectors, as they are the most commonly invested sectors among top financing assets.

Moreover, it seems that most funds have not fully engaged with emerging fields like Web3, NFTs, and the metaverse. In the next 6-12 months, as more investments may flow into these industries, there is a possibility that these funds have already invested in these sectors, but these positions are not liquid, or they are in some projects with tokens that have not yet launched, thus not reflected in this analysis.

V. Investing Like Crypto Funds?

Final thoughts on investing like crypto funds

Investing like a crypto fund, whether through risk or hedge, has never been easier. An ordinary investor can replicate these portfolios and mirror their favorite funds. However, while copying a well-known VC fund may seem like a good strategy, it is important to remember that non-accredited or professional investors still do not have equal participation opportunities.

Most of these funds typically acquire private placements at much cheaper prices, while funds focused on the short term are always waiting to liquidate portions of their tokens on hand to profit for their investors. Furthermore, during bull markets, liquid assets, especially new projects, often trade at a premium due to anticipated future valuations.

While there are still some barriers for individual investors in early crypto projects, investment opportunities are already ten times better than in the traditional financial world. The era of the ordinary investor is coming, and cryptocurrency will be a major avenue for growth.