A recent report by Hashed Emergent unveiled a vibrant Web3 ecosystem in India, boasting over 1,000 startups operating within the sector. This surge in Web3 initiatives underscores the country’s burgeoning technological landscape, with Bengaluru emerging as a focal point for innovation and industrial activity.
The collective funding raised by these Web3 startups has exceeded an impressive $2.5 billion, indicating robust growth and considerable investment potential within the sector. Despite the challenges posed by the pandemic, the Indian Web3 space has continued to attract significant capital, fueling its expansion and development.
Notably, funding for Indian Web3 startups reached approximately $270 million in 2023, marking a notable decrease of 81% compared to the previous year’s figures. However, despite this decline in total funding, the number of funding rounds has remained relatively consistent over the past two years. This trend suggests a sustained focus on fostering early-stage innovation and entrepreneurship within the Web3 ecosystem.
In an uncertain market, Indian Web3 startups prioritize efficiency as a strategic imperative.
Amidst a challenging funding landscape, founders of Indian Web3 startups have adopted a strategic shift towards prioritizing efficiency and cost reduction measures. This adjustment in focus has been prompted by the need to navigate uncertain market conditions, particularly in the context of securing initial capital. Consequently, there has been a noticeable decline in the number of Series A and subsequent funding rounds for Web3 startups as they seek to streamline their operations and optimize resource utilization.
Moreover, a recent report highlights several notable trends shaping the Indian Web3 landscape. These trends encompass the emergence of perpetual decentralized exchanges, platforms facilitating on-demand digital asset retrieval, middleware infrastructure projects, and scaling solutions characterized by a modular approach. These trends underscore the dynamic and rapidly evolving nature of the Web3 sector in India, as startups continue to innovate and adapt to meet the evolving needs of the market.
Despite the challenges posed by the funding environment, the Indian Web3 ecosystem has continued to attract investment from both domestic and international venture capital firms. Notably, prominent investors from regions such as the US, UAE, and Southeast Asia have actively participated in funding rounds, demonstrating confidence in the potential of the Indian Web3 market. Key investors include renowned names such as Alpha Wave, Hashed Emergent, Coinswitch Ventures, and Coinbase Ventures, reflecting the global interest and recognition of the growth opportunities within the Indian Web3 space.
The surge in Web3 developers in India reflects the nation’s rapid growth in this sector.
India has undeniably cemented its standing within the global Web3 developer community, experiencing a remarkable surge in its share over the years. What was once a modest 3% representation in 2018 has burgeoned significantly to a notable 12% by 2023.
One notable aspect of India’s Web3 developer community is its youthful composition, with a majority of participants joining within the past two years. Moreover, there has been a commendable upward trend in female participation, with figures climbing from a mere 3% to a notable 14% over the span of five years.
In 2023 alone, India witnessed a substantial influx of 3.5 million developers to Github, marking one of the highest growth rates globally. This surge in developer activity underscores the country’s burgeoning talent pool and its increasing prominence in the Web3 landscape.
While the United States maintains its position as the leader in the field, boasting a substantial 26% share of global Web3 developers, India’s growth trajectory is nothing short of impressive. Over the period from 2018 to 2023, the country experienced a staggering 300% surge in developer numbers, signaling its emergence as a key player in the global Web3 arena.
Indian developers are drawn to gaming and NFTs as burgeoning sectors of interest.
In the dynamic landscape of India’s Web3 development scene, blockchain platforms serve as the foundation upon which innovative projects and decentralized applications (dApps) are built. Ethereum has long held sway as the dominant blockchain platform, particularly renowned for its robust infrastructure and extensive support for decentralized finance (DeFi) initiatives. Within India’s burgeoning Web3 ecosystem, Ethereum continues to command a significant presence, serving as the preferred choice for infrastructure development and the deployment of DeFi projects.
However, recent trends indicate a notable diversification in platform preferences, with Solana and Polygon emerging as formidable contenders in the consumer-centric domain. These platforms offer distinct advantages, such as high throughput, low transaction fees, and scalability, making them increasingly attractive options for developers seeking to build applications catering to sectors like gaming and social platforms. Solana, in particular, has garnered attention for its impressive transaction processing capabilities, while Polygon’s Layer 2 scaling solutions have positioned it as a versatile platform for a wide range of applications.
In tandem with the shifting platform landscape, certain use cases have risen to prominence, capturing the imagination of Web3 developers in India. Gaming and non-fungible tokens (NFTs) have emerged as frontrunners, collectively drawing the interest of 31% of the workforce. The appeal of gaming lies in its immersive and interactive nature, offering developers ample opportunities to create engaging experiences that leverage blockchain technology for enhanced functionality and user interaction. Similarly, NFTs have gained widespread traction as a novel means of representing digital ownership and scarcity, driving innovation across sectors such as art, collectibles, and digital assets.
Alongside gaming and NFTs, DeFi and real-world asset applications have also garnered significant attention, attracting 21% of developers. DeFi remains a transformative force within the cryptocurrency space, offering decentralized alternatives to traditional financial services and fostering financial inclusion on a global scale. Meanwhile, real-world asset applications seek to bridge the gap between physical and digital assets, enabling the tokenization and exchange of real-world assets on blockchain platforms.
In India, meme coins continue to enjoy popularity.
While India boasts a prominent position in the global crypto market, its total value of crypto holdings still lags behind that of developed nations and some emerging markets. Bitcoin, the flagship cryptocurrency, remains the dominant asset in terms of holdings, capturing approximately 18% of the market share.
However, despite Bitcoin’s stronghold, it experienced a notable decline of 15% in value over the course of 2023. In contrast, Ethereum has witnessed a remarkable surge in holdings, with figures nearly increasing tenfold since 2020. Despite this impressive growth trajectory, Ethereum holdings also faced a setback in 2023, experiencing a 10% decrease compared to the previous year.
Interestingly, meme coins, such as Dogecoin and Shiba Inu, have maintained a surprisingly strong foothold within the Indian cryptocurrency market. These meme coins collectively account for a substantial portion, ranging from 15% to 18%, of total holdings. Moreover, they consistently rank among the top five coins traded on Indian centralized exchanges, underscoring their enduring popularity and widespread adoption among Indian investors.
Regulators are expanding their scope beyond mere bans to gain a comprehensive understanding of Web3.
The latest report highlights a noticeable shift in India’s regulatory approach towards Web3, marking a departure from the previously stringent stance characterized by blanket bans. Regulators now exhibit a more nuanced understanding of the intricacies inherent in blockchain technology and cryptocurrencies, reflecting a positive evolution in their approach.
Despite this positive shift, lingering uncertainties persist regarding the applicability of existing regulations to the dynamic landscape of Web3. Additionally, challenges stemming from the reluctance of banks, payment processors, and regulators to embrace this emerging technology have created obstacles for Indian Web3 projects and teams. Consequently, some entities have opted to relocate their operations overseas in pursuit of more conducive regulatory environments.
Looking ahead, Hashed Emergent foresees a dual-pronged regulatory strategy for India’s Web3 sector. On the international front, India is expected to collaborate with the G20 to establish consensus on effective regulatory frameworks tailored to the unique challenges posed by Web3 technologies. This global cooperation aims to foster harmonization and facilitate cross-border transactions within the Web3 ecosystem.
Simultaneously, India is anticipated to implement targeted domestic regulations that cater to the specific needs and nuances of its burgeoning Web3 ecosystem. These tailored regulations seek to strike a delicate balance between fostering innovation and ensuring consumer protection, thereby creating a conducive environment for the sustainable growth of Web3 initiatives within the country.
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