Ecosystem Expansion: How Web3 Projects Fund and Fuel Their Own Growth

The trend of Web3 projects investing in ventures that actively use their technology shows no signs of slowing down. And why should it? A form of inward investment, this bootstrapping of promising protocols and applications is analogous to sponsorship: after all, if a project is leveraging your tech and achieving success, funding it is a no-brainer.

An approach that fosters innovation within the ecosystem while also creating a symbiotic relationship that benefits all parties, it’s a tactic that has given rise to dedicated venture arms presiding over sizable war chests.

Let’s explore some notable examples of this strategy in action.

Orbs: To the Moon

Layer-3 public blockchain infrastructure project Orbs, which specializes in advanced on-chain trading, exemplifies the power of strategic ecosystem investment. And you don’t have to look far for evidence. 

Over the last 18 months, Orbs has made several significant investments in projects that utilize its technology. For example, it recently led a $300K seed round for Blast-based decentralized exchange (DEX) Fenix Finance, which leverages Liquidity Hub. The latter is Orbs’ permissionless infrastructure protocol, renowned for bringing the power of aggregated liquidity to any DEX-AMM. With Liquidity Hub, traders can access benefits such as deeper liquidity, lower fees, MEV protection, and gasless transactions, to name a handful.

Fenix Finance hasn’t been the only beneficiary of Orbs’ largesse. Earlier this year, Harris and Trotter Digital Assets was the subject of a $10 million funding round led by the company. A London-based crypto accountancy firm, Harris and Trotter Digital Assets was seen as the perfect vehicle for expanding Orbs’ L3 technology to fresh use-cases, with Orbs’ VP of Business Development Ran Hammer singling out its ‘proof of reserves’ as an area where “Orbs’ technology could be leveraged to ensure all data is trustworthy, accurate and verifiable.”

Elsewhere, Orbs has invested $600K in Thena, a DEX built on BNB Chain which integrates Liquidity Hub, and $1 million in the derivatives settlement layer SYMMIO, another long-term user of its L3 technology. Orbs’ power trust also extracted the checkbook for decentralized on-chain OTC derivatives exchange IntentX, making an undisclosed investment during the latter’s $1.8 million funding round.

It is not a case of Orbs pouring in money and standing back to await results either. In fact, Orbs actively collaborated with both SYMMIO and IntentX to build Perpetual Hub, a solution for on-chain perpetual futures trading. Perpetual Hub utilizes Orbs’ L3 tech to give traders the tools they need to trade perpetual futures on-chain with CeFi-level execution.

These investments demonstrate a fierce commitment to supporting projects that leverage its own technology, particularly Liquidity Hub but also Perpetual Hub. By investing in such ventures, Orbs expands its Web3 footprint while ensuring its tech makes an impact in the marketplace.

Polkadot: Community-Driven Funding

Leading blockchain Polkadot is another example of a platform only too happy to put its money where its mouth is. Particularly when it comes to funding projects building on its own technology.

Polkadot’s on-chain Treasury, which is managed by token-holders through the OpenGov system and holds over 20 million DOT (valued at more than $100 million), supports an array of funding initiatives including specialized development grants, project-specific grants (i.e. those dedicated to gaming or DeFi), and bug bounties.

One notable initiative is the JAM Implementers Prize which is designed to encourage multiple client implementations of the JAM protocol, a proposed upgrade to the Polkadot Relay Chain. Then there’s Polimec, a decentralized funding protocol that empowers stakeholders to participate in funding rounds and reduces asymmetry between participants and issuers.

TL;DR – if you’re enriching the Polkadot ecosystem in some way, and you can prove it, you stand a better than average chance of obtaining funding.

Animoca Brands: Building a Web3 Empire

Hong Kong-based game software company Animoca Brands has become one of the most active investors in the entire Web3 space. With a portfolio of over 450 companies at the time of writing, and its own dedicated venture arm (Animoca Ventures), it has helped to finance a swathe of projects, from game studios and blockchains to NFT marketplaces.

Although Animoca Brands doesn’t exclusively invest in projects operating within its own ecosystem, it’s fair to say that many of its biggest pledges have been to projects broadening its appeal in some way. For example, it made a big investment in Singapore-based Saakuru Labs, whose eponymous protocol integrated many games from Animoca’s catalog.

Clearly, the strategy of well-funded Web3 projects investing in ventures that use their tech is a powerful driver of innovation. From Polkadot’s hackathons and grants to Orbs’ strategic investments and Animoca Brands’ venture arm, it’s an approach that is shaping the crypto landscape. As the trend continues, expect to see more vibrant ecosystems emerge, setting the scene for further adoption of blockchain technology.