The blockchain ecosystem today stands at a crossroads. It’s an industry built on the backs of those who work relentlessly to create the future of finance, identity and more. However, it’s also a space where recent financial constraints have pushed many stakeholders and businesses to exit prematurely.
Tim Haldorsson is the founder and CEO of Lunar Strategy.
The long-term sustainability of this ecosystem may depend on one crucial lifeline: crypto grants. These initiatives already play a pivotal role in providing the necessary resources to Web3 builders, especially during bear markets when liquidity is scarce.
However, while the idea of non-dilutive funding is noble, things are rarely so black-and-white in practice. There are points of friction affecting the smooth facilitation of crypto grants, and potential ways to improve this crucial flow of capital.
The capital crunch in Web3
To understand the urgency of fair crypto grant distribution, we must first acknowledge the liquidity crunch currently affecting the blockchain ecosystem. Numbers don’t lie, there is a significant financial squeeze pressing on the crypto space, affecting how firms plan to grow, hire and invest.
Over $500 million was pulled from crypto asset funds this summer, a resounding blow to the available capital for Web3 startups that has sent ripples of uncertainty throughout the industry. What’s more, venture capitalist involvement in the blockchain space has been on a decline for seven consecutive quarters since its peak in Q4 2021.
See also: AI Is Killing Crypto Venture Capital Interest
The result? Layoffs and downsizing have become increasingly commonplace as Web3 projects struggle to navigate the choppy waters of a bear market with limited resources.
Crypto grants: the lifeline builders need
In the face of these difficulties, one ray of hope has emerged: crypto grants. Organizations like Dfinity (ICP), 1inch, Uniswap Foundation, Near, Aave, the Solana Foundation and others have recognized the importance of supporting builders in the Web3 space even in the face of harsh market conditions.
These grant programs act as a buffer against the economic constraints that have caused many crypto startups to fold. They offer a level of financial security that can make all the difference for promising projects, enabling them to…
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