For the HBAR Foundation, 2022 has been a year of interconnectedness. As the year comes to a close, we’d like to reflect on where we started, what we accomplished, and our learnings.
Let’s start by taking a look at what we set out to do.
In March of 2022, we published the HBAR Foundation 2022 Strategy. In it, we shared our point of view that crypto’s core innovation was around incentives and communities, and our mission was to support builders creating these communities by growing awareness, accelerating access to, and increasing commerce of the HBAR economy. To achieve those goals, we identified first mover industries and use cases, housed in our four primary funds - Crypto Economy, Metaverse, Sustainable Impact, and Fintech.
In the last year, we’ve refined our thinking to reflect the shifting Web3 landscape. We’ll share more details on the 2023 strategy early next year, but we’ve highlighted the changes worth noting below.
OUR VISION: In a multichain world, groups of individuals and institutions will form digitally-native communities that control their own value. We believe Hedera is the first chain of choice.
In working towards our mission of supporting builders, the Foundation engages in five main workstreams.
Lesson 1: Foundation support goes beyond just funding
While the grant process is important, it is only one of the many ways the Foundation supports the Hedera ecosystem. In fact, we’ve found the work and the strategy post-grant is equally, if not more meaningful. The interconnectedness between dApps and projects, often with the Foundation taking a back seat, is the self-sustaining engine of our ecosystem.
We’d like to provide more transparency into how the Foundation makes grants and our funding philosophy. The grant process is organized into five stages:
Our funding is milestone-driven. Foundation grants are “need-based” as every dollar we allocate is intended for an express purpose. This could look like a development milestone or onboarding growth target. Of the $300M+ committed to ecosystem development, over 94% are tied to completion or achievement of clearly articulated milestones. As these milestones are related to on-chain value, we are confident our grants are actively growing our ecosystem in a meaningful way. The remaining is upfront funding used to kickstart building, similarly milestone-focused with mutually agreed-upon expectations around progress.
Consider this year’s network performance.
530M transactions this year with an average transactions per second (TPS) of 18.98.
Hedera’s average yearly TPS of 18.98 is on par with, if not higher than, our peer networks.
769.7K accounts created this year - 276.6K of which are active.
The Q3 State of Hedera Messari report further contextualizes this strong quarter over quarter growth during the bear market, with all five network service transaction volume increasing between Q2 and Q3 2022.
Between Q3 2021 and Q3 2022, network revenue calculated by total transaction fees grew 12x from 151,147 HBAR to 1,821,274 HBAR. While we are still parsing out the transaction fee data, the 543.8% increase in transaction fees between Q2 and Q3 2022 is correlated to the drastic increase in smart contract and token service transactions, which have different fee models than the consensus service. TVL and average active users also increased in current market conditions.
Let’s take a look at the Foundation’s grant program performance.
Since we opened our grant application, the Foundation has received almost 1300 applications. This is more than 100 applications per month, which is a healthy signal for ecosystem development and developer interest.
This year, 40% of applicants self-selected as Metaverse, 29% as Crypto Economy, 7% as Sustainable Impact, 5% as Fintech and Payments. The remaining 19% applied without selecting a specific fund category. That 69% of applications fell into the crypto economy and metaverse fund categories indicates a hunger for these use cases within the Hedera ecosystem.
Applicants can also identify what type of project they are. The most common applicants were infrastructure (13%), institutional DeFi (11%), and general metaverse (9%).
This year, the Foundation has given 195 grants. The Metaverse and Crypto Economy funds were most prolific, accounting for 37% and 28% of grants given, respectively. The size of grants from these funds also varied most - with a higher percentage of grants for projects with smaller scopes coming to market faster.
The top grant categories, agnostic of funds, were infrastructure and Defi, each accounting for 12.3% of grants given. Enterprise, gaming, payments, art/collectibles, and marketplaces each accounted for 6.67%. These splits reflect the Foundation’s strategy around focusing on key areas of opportunity (payments, gaming, enterprise) while filling gaps in infrastructure and web3 use cases (Defi and art/collectibles).
65% of grants were committed during Q2 and Q3, indicating the Foundation ramped up quickly and efficiently in the first half of 2022.
We are consistently impressed by the caliber of our ecosystem, and a clear metric is how many grantees have brought their products, services, and use cases to market. To date, 89 projects are live on mainnet - 45% of all grantee projects. This is remarkably fast, given when the majority of grants were committed this year. This again speaks to the quality of projects and commitment by those teams to developing and deploying on Hedera.
An obvious callout is the disproportionately large number of Crypto Economy and Metaverse projects that are live. A large driver of this tends to be inherent to these use cases, which have clearer crypto-native precedence, simpler integration paths, and more examples of build requirements. Fintech and Sustainability projects are subject to industry-specific regulatory, compliance, and technical considerations and standards. The number of projects on mainnet from these two funds is a major accomplishment.
Lesson 2: Product development lifecycles vary
Different industries have very different product development lifecycles, dependent on a myriad of characteristics. Development can vary from 1 month to several years and the Foundation’s support needs to match these different requirements.
Considering the rolling nature of the Foundation's grant program and the varying product development lifecycles, a 45% grant go-live is an achievement we are proud of. In fact, dozens of non-grantees, including Governing Council members and start ups, are also users of open source infrastructure on Hedera, like the Guardian.
More excitingly, based on current milestones communicated to us by grantees, we anticipate almost 80 projects going live by the end of Q1 2023.
Lesson 3: Roadmaps always change
We appreciate that our grant recipients are so communicative and collaborative with us. We know roadmaps need to be reflective of a changing market. And we’ve seen grantees succeed who are both clear on the objective but agile and strategic at the same time.
In addition to supporting grantees pre and post launch, we’ll also continue to nurture our active pipeline of potential opportunities. Approximately 42% of opportunities are active conversations, either around grant scoping or agreement negotiation.
The Foundation has three primary goals - to raise awareness, accelerate access, and increase commerce in the HBAR economy. Across all funds, the Foundation has achieved key wins for each of these goals.
Staking, both liquid and native, and its healthy growth in current market conditions has contributed to growing awareness of Hedera as a vibrant ecosystem. To date, there is approximately 33B HBAR staked across both solutions. The building blocks around infrastructure and market components have also made grants like Realm, which brings Hedera to AAA publishers like EA, and the SIF’s incredible showing at COP27, possible. The scale and enterprise-grade growth has also made it worthwhile for companies like Joget to release no-code/low code applications that bring Hedera to businesses delivering real-world value.
The Hedera ecosystem has also become degrees more accessible, with robust and diverse wallet support - Ledger Live, Hashpack, Blade, Wallawallet, Kabila and more. Zoop diversifies onboarding of consumers through their digital celebrity collectible trading platform in partnership with Ready Player Me. Tymlez makes it easy for all businesses to trust their carbon reporting solutions for ESG compliance. Reality+’s Hedera integration also exposes Hedera to top tier brands like FIFA, exponentially increasing the total addressable market of Hedera users. And, LG Art Lab’s hardware/software art marketplace is a boundary-pushing example of what mainstream Hedera adoption will look like. We’ve also partnered with several accelerators to turbo-charge Hedera accessibility - Outlier Ventures and Lumos Labs.
Top of mind is the explosive growth of NFT collections and marketplaces making Hedera one of the most vibrant ecosystems. We’ve also made it possible for individuals and institutions around the world to transact simply, safely, and securely with trusted stablecoins and stablecoin infrastructure - ANZ Bank’s A$DC and StraitsX’s SGD. Dropp’s micropayment platform will onboard merchants by simplifying the current consumer relationship to purchasable content. In fact, Dropp recently completed their integrations with Shopify and Wordpress. The Guardian, a Hedera-native open-source policy workflow engine, enables digital environmental assets to be tied to granular dMRV (digital measurement, reporting, and verification) data. The regenerative economy built on the Guardian is the most auditable, data discoverable, and liquid market.
Of course, none of these goals are discrete, and many grants achieve all three of these goals. And while we’ve highlighted the community-facing work of the Foundation, none of this would have been possible without the partnership of our central functions - People, Finance, Operations, Tech, and Legal.
Lesson 4: Interconnectedness is organic
Our fourth lesson learned is more of an observation and a pleasant surprise. The 2022 strategy was one of interconnectedness - between funds, across the tech stack, and spanning diverse use cases. Our hope was this would allow for organic interconnectedness among our grant and developer community. And it did.
We’ve been blown away by the synergies the Hedera community and ecosystem finds on its own. And we’re so impressed with how the community has grown while maintaining its ethos of kindness, openness, and inspiration. We’re proud and honored to work alongside you, growing the Hedera ecosystem.
Happy Holidays, everyone! See you in 2023.