October 19, 2023
Web3
24
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0xScope

The 0xScope Web3 Data Industry Report

Data is the most important resource in the world. Web3 is no exception, and in many cases, staying informed about the latest trends and movements in crypto is paramount to success. To that end, many Web3 companies emerged to provide individuals, companies, and institutions with the information they need to make crucial decisions on investments, operations, marketing, and other fronts.

Data gathering on Web3 started with the existence of block explorers that track every transaction across all addresses on a blockchain network. As crypto evolved with the introduction of smart contracts and different token standards, activities on the blockchain started to incorporate more data with each new use case being added to the Web3 ecosystem.

Today, there are hundreds of Web3 companies and projects that specialize in data collection, processing, and analysis. Some of these entities focused on the gathering and indexing of raw data to be packaged into oracles or extracted through their API-focused services. Other companies created solutions that further synthesize raw or semi-processed data into more actionable intel targeted toward more specific purposes.

In creating an overview of the Web3 data industry, the 0xScope team gathered information about hundreds of blockchain data companies and categorized them into different segments that show where they are placed in the Web3 data process.

Methodology

Before the release of 0xScope's Web3 Data Industry Report, there were a few notable discussions on how to categorize crypto data companies. Since last year, Web3 veteran ZK Zhao has been periodically curating a visualization of how Web3 data companies can be segmented depending on their target end-users and what type of data they transmit. Meanwhile, Systamental founder Nick Latinovic provided a comprehensive discussion of how to sort the industry based on the data science hierarchy of needs, the assembly line paradigm, and several other schools of thought. By taking into account their earlier work and combining them with extensive research from the 0xScope team, we have come up with an illustration of the Web3 data ecosystem, arranged according to the types of data that these companies process.

Click here to expand the infographic.

[NOTE: Considering that Web3 is a rapidly growing industry, this 0xScope Web3 Data Ecosystem infographic is by no means completely exhaustive. If you think that your company or project should be added to the next edition of this report, please fill up this form or email us at community@0xscope.com.

By mapping the companies this way, we can present an easy-to-follow map of the companies' and segments' different responsibilities. 0xScope is uniquely positioned to undertake this market-wide analysis as a fast-rising Web3 data app with multiple services that track and analyze relevant crypto information, whether corporate-oriented (through ScopeVC) or more available to the public (through Scopescan).

Raw Data

The further you are to the left of the infographic, you will see companies that deal with raw data, whether on-chain (Web3 databases with incorporated data straight from blockchains, social graphs of Web3 addresses, etc.) or off-chain (oracles and other solutions that incorporate real-world data outside of blockchain into Web3 solutions). These companies, put under the Raw Data category, provide data services that are more on the technical side, as the output they generate typically requires developer know-how to process properly and integrate into actionable insights.

Oracles

In blockchain terms, oracles send, execute, and verify data gathered from external centralized sources, then submit them to smart contracts. They play a vital role in the Web3 ecosystem, as many crypto apps and currencies rely on external data transmitted by oracles to process transactions, maintain value pegs, and complete a diverse array of on-chain activities.

The importance of oracles in Web3 activities is highlighted by the interest of both venture capital and retail crypto investors to pour money into oracle solutions. Out of the 16 oracle companies included in the report, 8 have raised a total of $59.8M from venture capital. Meanwhile, 10 have publicly trading tokens, with a cumulative market cap of $4.47B, indicative of the high interest of token holders in the industry. Long-time top-20 crypto token Chainlink accounted for $4.05B of that total cap, reflective of its dominance in the oracle market.

There is plenty of room for growth innovation in the oracle space, especially as more Web3 use cases become popular. For instance, real-world assets (RWAs) are becoming more popular in recent months, and these assets will require the reliability of oracles connected to offchain market data to sustain their growth. Oracles can also come up with more efficient ways to leverage offchain data, giving them distinct advantages over the growing competition.

Social Graph

The social graph, popularized by Facebook co-founder Mark Zuckerberg, is a visual representation of people's relationships and connections. In the hands of a megavillain social network, it fuels news feeds and doomscrolling. On Web3, where users have the means to control their data while protecting their privacy, it empowers people to decide who they share their data with. Therefore, Web3 social graph companies collect information on connections built by people on the blockchain, this time featuring privacy protections and decentralized incentive systems incorporated for willing participants.

Some social graph projects like Steemit, DeSo, and Mirror.xyz focus on content creation by its community to power further connections. For our purposes, we focused on companies whose main objective is to create social graphs that will be more actionable for Web3 developers. Six of the seven companies listed under this category have a combined venture capital raise of $77.6M.

The social graph segment is still in its early days, especially compared to social media giants of today. But given the increasing interest in Web3-built digital identity solutions and the industry's continued efforts to build a better social media paradigm, the segment will likely see much growth in the future. But this growth will only be realized if the segment's companies will continue building upon their solutions and eventually develop platforms that are as easy to use as Facebook or Tiktok.

Back in June 2023, during Lens Protocol's $15M fundraising, Aave Companies CEO Stani Kulechov said this about the future of the Web3 social graph sector: "We’re filling the ecosystem with applications that are familiar to traditional social media, [and] we envision a future where all these applications and algorithms share monetization that comes from different use cases and features."

Web3 Database

Web3 database companies provide decentralized peer-to-peer data storage and indexing services that power Web3 apps. These companies function as the Web3 version of the databases that traditional tech companies use. What sets them different from Web2 databases is the capacity to replicate stored data across a number of nodes on a decentralized network, making them more reliable and secure.

As back-end solutions, Web3 database companies do not get the same hype as oracles or social graphs, but they pull in considerable venture interest, to the tune of $65.7M in funds raised across the five companies we listed in this category.

Web3 database companies face an uphill challenge in terms of balancing scalability and decentralization. They also have to find ways to lower the cost implications of storing data on-chain, especially given that 1 MB of data storage on Ethereum costs a staggering $17,000.

Developer-Focused Data

The next phase of the data cycle is in the middle of the map, where we list companies that either transmit or collect/analyze raw blockchain data in a way that developers can find useful. The end users for this segment of the Web3 industry are either developers or other people with high technical skills in making sense of Web3 data. Hence, we filed these companies under the Developer-Focused Data segment.

Within this segment, we further differentiate between data transmission companies (API-focused projects, node services), whose outputs are less refined in the public eye but are very useful for Web3 builders, and data processing companies (data collection and/or analytics companies) that collect, index, and apply raw blockchain data to more presentable formats that are still targeted towards a highly technical audience. Take note that in some instances, companies under the data processing category are sometimes involved in delivering general-purpose data, depending on the product suite they offer.

API

APIs, short for "application programming interfaces," allow two applications to communicate for the purposes of extracting and sharing data between both parties. When a user goes on the internet and types a specific website URL, the API processes this information and delivers it to a server that will retrieve the data needed to display that website to the user. The server then sends the data to the API, which interprets the information and displays it to the user in a readable way. The same principle applies to Web3 APIs, except this time the user is the dapp, and the server is the assortment of databases, oracles, and other raw Web3 data that needs processing to become actionable.

Given that Web3 APIs serve as the bridge that allows dapps to transform raw blockchain data into programmable information, it's not surprising that the sector is huge. We have listed 28 API companies in this category, with a combined venture capital raise of $396.7M. This number will likely grow more as the demand for Web3 data and apps increases.

Web3 APIs are required to process a large volume of transactions in a decentralized manner, hence there are several catalysts that can unlock further growth for this segment. The main challenges that Web3 APIs are solving include cross-chain interoperability, speed and efficiency improvements, and stronger privacy and security measures. There's also a huge potential for Web3 APIs to integrate into existing Web2 infrastructure, possibly resulting in further mainstream adoption for Web3.

Some Web3 API companies are seeing more potential catalysts for growth, including factors outside of Web3. Vybe Network CEO Arun Dass predicted this: "Autonomous AI agents will grow to be the largest consumer of Web3 APIs. Also, I believe the emergence of RWAs (real-world assets) and maturing of DeFi will be the driving trend of the near future in Web3."

Meanwhile, SubQuery Network COO James Bayly thinks that Web3 developers will change their priorities in the future, benefitting API companies in the process. "We expect the sector to continue to grow as the web3 ecosystem matures. At the moment, we're expecting a transition away from developers building blockchains to developers building dApps on those blockchains, representing a shift to real-world use cases rather than infrastructure and network-level development. All these developers are going to require the services of Web3 data APIs and indexers," he said.

There's also a sense of bullishness in many Web3 API companies, given the integral roles they play in making sure that dapps continue to run smoothly. "We're still in the early stages of Web3 data tooling. In the future, we'll see more full-stack platforms like Goldsky that handle the technical complexities of onchain data streaming so that builders can focus on core UX," Goldsky Marketing Lead Andrew Harrison shared.

"The future is decentralized, and companies like Helius are leading the way. With every blockchain advancement, especially on platforms like Solana, we’re not just participating - we're defining the future," Helius' Creative & Marketing Executive Jahris said about his company's prospects.

Node Services

Node service companies create and maintain blockchain nodes on behalf of app developers and companies. Many dapps need to interact with blockchains through nodes to get on-chain information and build their solutions. To connect to these blockchains, dapp developers may opt to run their own nodes, use a single node owned by another party, or use node services. Several companies choose to get the services of node providers for their expertise in building nodes and keeping them reliable.

Alongside APIs, the node services sector serves as the backbone of Web3 infrastructure and development, based on the sheer number of dapps that require their services. Venture capital funds have taken notice, with investments worth $1.18B across six of the nine companies included in this segment. Alchemy accounts for about half of that valuation, at $563.9M, but the sector is likely to be worth even more, as major node service company Infura was bought by Consensys for an undisclosed amount.

For node service companies to grow beyond their already high valuations, they will need to continue adding support for more blockchains and offer a more comprehensive solutions suite. To be fair, some of these companies have diversified to offering API solutions with specific target areas like NFTs, as well as other infrastructure solutions.

One possible area of diversification is AI, which is being explored by Alchemy through its launch of AlchemyAI in June 2023. "With AI assistance, Web3 developers can tap into a vast array of predefined code snippets, templates, and best practices, reducing the time spent on repetitive tasks," Alchemy said in a statement.

Analytics

Web3 analytics encompasses a wide array of products and services that focus on collecting and processing blockchain data into various outputs such as dashboards, data visualizations, and more. In this sector, we focus on companies whose target markets are more on the technical side of the Web3 space. Some companies focus on analysis and computations of blockchain data for developer communities and enterprise solutions, while others incorporate technology such as AI and machine learning to present a unique selling proposition to clients.

The Web3 analytics sector includes 16 companies, 12 of which have a combined venture capital raise of $229.3M. Dune Analytics and Flipside Crypto lead the companies in this segment at $79.4M and $61.5M raised, respectively.

This sector is very competitive, with lots of unique differentiators across companies. It is flexible as well; in many cases, analytics companies end up providing solutions to people outside of their usual target markets. For instance, a few of these companies can be considered as competitors or even complementary to Web3 enterprise data companies, whose services are targeted towards traders and other corporate audiences.

Data analytics companies are well aware of the integral role they will play in Web3's future, and some of these companies are playing a part. "At Geniidata, we advocate for the democratization of data. The data analytics industry is experiencing significant growth and is poised to become a cornerstone of the entire crypto market. Open distributed indexers and accessible APIs are the key elements for reinforcing robust infrastructure within the crypto space," a representative from Geniidata said in a statement about the sector's future.

Meanwhile, DeepDAO Growth and Product Lead Amandeep is banking on new infrastructure to fuel the next phase of growth for Web3 data companies. "There still isn't a very robust wallet-to-wallet communications tool. Also, a significant percentage of metadata, be it attestations, DAO-related data, or activity on Web3 social networks, have been stored offchain. We see this changing, with more platforms deciding to go the full onchain route now that we have Layer-2 scaling solutions and these changes will greatly improve the data availability for Web3 analytics platforms," he said.

Data Collection

Web3 data collection companies focus on providing market data on cryptocurrencies, including prices, trading specifics, and more. These companies have a few similarities with public data companies (more on that later), particularly regarding the provision of market data. However, in the case of data collection companies, their services are targeted more towards developers and other enterprise-level clients. Hence, we categorized the data collection segment under the developer-focused umbrella of this report.

The data collection sector is quite a small segment consisting of only four companies so far. Two of these companies - CoinMetrics and Kaiko - disclosed venture capital raises worth a total of $141.9M.

Despite its small size, the Web3 data collection sector still plays a vital role in relaying reliable market data for the Web3 industry. Many Web3 operations, from DeFi and high-frequency trading to NFTs, have incorporated market data in their offerings. It remains to be seen whether the sector adds more players, but there is an opportunity to come up with a unique and compelling data collection offering that is different from the relatively small number of existing solutions in the market.

Some of these companies have already started differentiating their offerings to spark future growth, with at least one company aiming to add non-Web3 clients under its service umbrella. When asked about the direction that crypto data collection companies are taking, Kaiko's Head of Growth Clara Medalie said, "Crypto data companies will become indispensable partners for traditional financial firms entering the industry. These companies will provide information on the new wave of tokenized assets. Data has become one of the most crucial aspects of any crypto strategy. At Kaiko, we put an emphasis on granularity, quality, and service. All of our market data products, analytics, and indices are designed to be used by professionals in the crypto and traditional finance industry."

General-Purpose Data

Companies that are involved in processing raw data, metadata, and partially processed data from APIs and other sources into more presentable rankings, tables, charts, dashboards, and other forms of media are put under the Data Applications category. This segment is further categorized depending on the companies' specializations in target audiences, areas of focus, and other factors. We differentiate between B2B (business-to-business) and B2C (business-to-consumer) companies and then sort them further based on their core competencies.

Enterprise Data

Web3 enterprise data companies collect on-chain and off-chain data from various sources in the Web3 data industry and process them to come up with sophisticated solutions for professional crypto traders and fund managers. These companies are mostly offering market intelligence solutions, such as portfolio tracking, wallet identification, money flow charts, and many other trading- and transaction-focused products. While we mentioned earlier that enterprise data companies share a lot of similarities with Web3 analytics companies, the target market for the former is more explicitly business-oriented.

Among the 16 companies listed under the Web3 enterprise data segment, 9 have raised venture capital worth a combined $151M. This figure is quite small compared to many other segments in this report, which represents both a challenge and an opportunity for these companies.

The ongoing challenge for enterprise data companies is to come up with a product suite that's as comprehensive and useful as possible for enterprise clients. Nevertheless, as the crypto industry is still in its early days, there are a lot of opportunities to further grow and refine the Web3 enterprise market to a point where it's possible to have a Web3 version of well-known market intelligence companies like Bloomberg and S&P.

In 0xScope's case, the company has set its sights on going for quality in its services. "Although there are many data projects in Web3, 0xScope has differentiated itself from the field by our focus on providing higher-quality, actionable information for our clients. We do this by removing data noise through association analysis and providing a comprehensive suite of Web3 data tracking and investigation tools," 0xScope Co-Founder Jackson Li said in a statement.

AML/Compliance

Web3 AML/compliance companies target the same audience as enterprise data companies, but with products that are more focused on crypto investigations, security measures, and fraud detection, among other serious stuff. Enterprise data companies are there to help businesses grow, while AML/compliance companies exist to ensure that businesses don't die from being implicated in criminal activity. There's also one target market that AML/compliance companies can approach better than other general-purpose data companies: government agencies.

As a result, the Web3 AML/compliance segment is quite lucrative, with 11 companies raising a total of $870.6M from venture capital. More than half of that amount is from Chainalysis, which has established itself as a well-known brand in this particular niche, although several other competitors have emerged to take a slice of the growing AML/compliance market.

The prominence of Web3 AML/compliance companies is indicative of a hard truth: that crypto is still being used for many illegal activities. This is a serious challenge to Web3's goal of mainstream adoption, so while crypto hacks, thefts, and money laundering remain as persistent problems in the Web3 space, AML/compliance companies will keep bringing in clients and profits.

Public Data

As the name states, Web3 public data companies are all about presenting and disseminating Web3 information and metrics to a wide audience. At any given time, a person can go to these companies' websites and access well-presented data on blockchains, cryptocurrencies, markets, dapps, and more. Some of these platforms also offer a wide array of research-driven content and topic-specific dashboards to complement their existing offerings. As public-facing platforms, these companies' websites are some of the most visited in the world.

Ironically, the Web3 public data sector is not quite public when it comes to funds raised from venture capital. From our list of 12 public data companies, only three have disclosed a combined $74.3M in funding. Another company, CoinMarketCap, was bought by Binance for $400M, so we can have a conservative estimate of $474.3M for the segment's total fundraising. Take note that CoinMarketCap rival CoinGecko has not disclosed any financial information at all, so it's highly likely that the actual valuation of this segment is way higher, considering the sheer amount of web traffic they generate.

The Web3 public data sector is filled with well-known names in crypto, all with pretty established business models and relatively little upside, at least compared to other segments that have more catalysts for growth. It's more likely that the next growth wave for the sector will come from smaller rivals that find their own niches.

But from the perspective of established companies in the Web3 public data sector, the Web3 market will continue to expand, bringing benefits to any participant, large or small. "Web3 will be spreading into many other sectors, including the social sector, carbon markets, art, real estate, gaming, and more. This can already be seen today, but it's probably only on a 1/10th scale of what it would look like by 2030," according to Jin Wai Choo, CoinMarketCap's Ecosystem Business Development Manager. "The demand for data will be very strong in the future as people want to be able to target consumers more effectively and efficiently, especially with the help of AI," he added, perhaps signaling that CoinMarketCap could be exploring the use of AI for its next growth phase.

Robert Hoogendoorn Sr., Communications Manager of DappRadar, shares this optimism for the future of Web3 public data companies. "With financial business solutions, consumer reward programs, and video games as clear examples, the blockchain industry is well positioned to infiltrate every possible market. With increased utility and innovation, demand for blockchain data will only increase, both in the B2C and B2B markets. At the moment, DappRadar registers roughly 2.2 million daily active wallets interacting with decentralized applications, and it's a safe bet that those numbers will skyrocket in the years to come," he said.

Many Web3 data companies that would otherwise be categorized under the public data segment, but are so identified with specific areas of the Web3 industry that they merit separate categories. Here are three of them:

Block Explorer

Block explorers are pretty self-explanatory. You search for a particular address or transaction, and block explorers display information about what you searched for. There is at least one block explorer for each blockchain in existence, but newer iterations of the block explorer niche include features such as AI integration, money flow visualizations, and more.

There are five companies listed in the block explorer segment. Four of them have a combined fundraise of $26.8M from venture capital. Curiously, this excludes block explorer OG Etherscan, which hasn't disclosed its financials. The small-capital nature of the block explorer segment is unsurprising, because unlike other Web3 data segments that have various growth opportunities by expanding their product lineups, there's only so much that you can add to a block explorer.

Future prospects for the block explorer segment are contingent on two factors: market conditions and out-of-the-box innovation. The first one is beyond the control of block explorers; expect more traffic in bull seasons than bear periods. The second one is where block explorers can exert their efforts, particularly in the area of user experience. Perhaps one day, block explorers will be as sophisticated in presenting data as Google.

DeFi Data

The DeFi data segment encompasses several DeFi-related data services, all accessible to the public. This segment includes DeFi portfolio trackers, transaction history analysis, DEX data providers, DEX charting platforms, trading apps, TVL (total value locked) aggregators, and more. DeFi is a Web3 segment that is distinct in its language, objectives, and jargon, so it's unsurprising that many Web3 data companies end up serving under this particular niche.

Out of the 8 companies listed under the DeFi data segment, only three (DeBank, Zerion, Zapper) have declared venture capital raises amounting to a combined $75M. Please note that some well-known names in the DeFi data space, like DefiLlama and DEX Screener, have not disclosed their financials, raising the likelihood that the segment is more valuable than what's publicly revealed.

One good thing that people can observe from the companies under the DeFi data segment is that each company has a relatively well-defined differentiation from its peers. This will become more crucial, as analytics and enterprise data companies are likely to offer solutions that are quite similar to what this segment's companies offer. Another potential tailwind for this sector is the rising popularity of DeFi, especially given the regulatory difficulties being faced by centralized exchanges around the world.

Some of the industry players in this segment are optimistic about their prospects. "The future of DeFi-focused Web3 data companies looks promising as they stand at the intersection of two groundbreaking technological shifts: decentralized finance (DeFi) and Web3. As the DeFi ecosystem (and crypto markets in general) matures, the demand for accurate, timely, clear, and digestible data will surge, positioning Web3 data companies as the backbone of this new financial infrastructure," said Nick Sawinyh, the co-founder of DexGuru. "Data companies will likely play a pivotal role in ensuring transparency, fostering trust, and enabling more sophisticated decision-making around financial products in a decentralized world."

NFT Data

Around the same time that DeFi rose to prominence, NFTs became huge hits in the Web3 space and even beyond, with celebrities spending millions on pictures of cartoon apes. With the rise of this whimsical market for NFTs, which undoubtedly have compelling use cases that are otherwise subverted by overall hype, several NFT data companies emerged to make sense of the transactions and details behind each asset. Soon, NFT-related services such as asset explorers, analytics platforms, data aggregators, portfolio management, and even trackers for celebrity-owned blockchain addresses.

This report lists 11 companies under the NFT data segment, with 10 of those disclosing venture capital fundraises worth a total of $64.5M. The top two companies in terms of capital raised are NFT wallet tracker Context ($19.5M) and NFT analytics platform NFTGo ($10.9M).

Here comes the bad news: NFTs are down big from peak price levels back in 2021, and there's little indication of a resurgence in the near future, although NFT companies will certainly try their best. The bear market has hit the industry hard, but few sectors have been as adversely affected as NFTs. Hence, NFT data companies will likely have to find more avenues of growth to make them resilient regardless of the level of public interest in NFTs.

Conclusion

In total, the Web3 data industry has raised $3.81B from venture capital, and the real value is likely even higher due to non-disclosures by some of the bigger names in the space like CoinGecko, Infura, and more. Each sector faces its own challenges, from increased competition at segments like APIs, enterprise data companies, and oracles, to market-related difficulties in the case of NFT tools. As mentioned earlier, this list is by no means exhaustive, given that there are new Web3 startups being built every day. The 0xScope team will continue to monitor the Web3 data industry as it grows. Stay tuned for an upcoming series of articles that provide in-depth discussions and insight into each segment of the Web3 data ecosystem.

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