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Crypto startups raised a total of $2.7 billion in venture capital funding in the second quarter of the year, with expectations of funding volume and pace increasing throughout the year.

Crypto fundraising increased slightly by 2.5%, but the number of deals closed declined 12.5% to 503 from the first quarter, according to a new report from Pitchbook. The total raised also represents a 9.8% drop compared to the same period last year.

The report noted, however, that the deals that did happen tended to be for larger sums of money despite fewer deals.

The small bump in crypto funding in the second quarter marked the third consecutive quarter of growth in the total value of investment, with Pitchbook anticipating that the volume and pace of investments will continue to improve in the course of the year. PitchBook senior analyst Robert Le attributes this increase to the broader recovery of crypto prices and growing institutional digital asset adoption.

Infrastructure projects dominated crypto fundraising in the second quarter, with the largest rounds secured by parallelization layer 1 Monad, decentralized finance (DeFi) layer 1 Berachain, and Bitcoin staking platform Babylon. On the other hand, consumer-focused applications remained less attractive to venture capitalists, per the report.

The two largest funding rounds in the second quarter went to social media platform Farcaster, securing $150 million in a Series A round, and Zentry, a blockchain-based gaming platform, raising $140 million in an early-stage round.

Simultaneously, exit activities — the process where investors cash out their stakes in a company — increased to their highest levels since early 2022, with 26 exits in the second quarter, notably including Robinhood Markets’s acquisition of Bitstamp. PitchBook anticipates this trend of increased exit activities could persist for the remainder of the year.

“We expect more consolidation among crypto exchanges, custodians, and infrastructure providers as the market matures and smaller players seek strategic exits,” the report noted.

Compared to 2023, valuations rose for seed and early-stage investments but declined for late-stage ones. This suggests heightened competition for early-stage funding, while late-stage rounds face less intense investor interest, according to PitchBook.

Read more: European AI firms secured $6.8B in VC funding in H1: PitchBook