Author: Yogita Khatri
Translated by: Deep Tide TechFlow
Quick Overview
In 2024, venture capital funding in the crypto space increased by 28% year-on-year, reaching $13.7 billion, yet still did not reach historical peaks.
Top-tier crypto venture capital firms believe that funding in 2025 will primarily flow to startups that demonstrate strong product-market fit.
According to funding data from The Block Pro, crypto venture capital funding grew significantly in 2024, with a year-over-year increase of 28%, reaching approximately $13.7 billion. Although this achievement is an improvement compared to 2023, overall market sentiment remains optimistic, yet has not returned to previous historical highs.
Looking ahead to 2025, top crypto venture capital firms hold a cautious yet optimistic attitude towards the future. While most believe that funding levels are unlikely to return to the highs of 2021-2022, there is a consensus in the industry: startups that can demonstrate strong product-market fit and have a real user base will find it easier to attract capital.
Here are specific views on the funding outlook for 2025 from leaders of institutions such as Dragonfly, Pantera, Multicoin, Coinbase Ventures, Binance Labs, and Galaxy Ventures.
Dragonfly: Betting on DeFi, CeFi, and stablecoins
Rob Hadick, general partner at Dragonfly, stated that due to the gradual easing of the U.S. regulatory environment, potential continued increases in token prices, and accelerated inflows of institutional capital, crypto venture capital funding in 2025 is expected to see significant growth. However, he also indicated that funding levels are unlikely to return to the highs of 2021-2022 in the short term, reflecting venture capital firms' cautious attitude towards avoiding past mistakes.
Dragonfly is currently focused on supporting excellent founders who demonstrate clear product-market fit in decentralized finance (DeFi), scaling platforms, centralized finance (CeFi), and stablecoin/payment fields. Although emerging areas like crypto AI and decentralized physical infrastructure networks (DePINs) are also within their focus, Hadick stated that these areas are still in the experimental stage.
In contrast, investments in traditional areas such as security, tokenization, and interoperability may decrease, as the market's focus gradually shifts to newer directions. He also predicts that decentralized social media will face significant challenges due to its lack of scalability and product-market fit.
Pantera: Optimistic about crypto AI, DePINs, and new Layer 1
Lauren Stephanian, general partner at Pantera Capital, indicated that as investor confidence in U.S. pro-crypto policies strengthens, crypto venture capital funding is expected to grow further in 2025.
However, she also reminded that 'bull markets do not last forever,' so 'when we will start to see a slowdown in capital deployment next year remains to be seen.'
Pantera is currently continuing extensive investments in the crypto and blockchain space but is particularly optimistic about crypto AI, DePINs, and new Layer 1 that supports more application-level features.
Multicoin: Continuing to be optimistic about the Solana ecosystem
Multicoin Capital is increasing its layout in DeFi applications, particularly within the Solana ecosystem. According to Kyle Samani, co-founder and managing partner of Multicoin Capital, Solana has outperformed Ethereum and Layer 2 ecosystems in key on-chain metrics this year. 'We expect this trend to continue, with the applications and protocols of the Solana ecosystem standing out in the next cycle as more users, capital, project launches, and activities migrate to Solana.'
Samani also noted that Ethereum may continue to face challenges, 'even potentially entering a long-term decline,' as it is facing fierce competition from Solana and other faster, cheaper blockchains. 'Unless Ethereum can enhance its competitiveness, developers, users, and capital will turn to other chains that can better meet their needs.'
Additionally, Multicoin has great confidence in stablecoins. Samani described stablecoins as 'possibly one of the most important technological and financial innovations of our generation.'
'Stablecoins are expected to become an undeniable force in 2025,' Samani stated. 'There is a strong demand for the dollar worldwide, and stablecoins are the most effective way to access the dollar. The design space in this area is vast, and we are still in a relatively early stage on its adoption curve.'
Coinbase Ventures: Focused on on-chain economy, laying out application layer
Hoolie Tejwani, head of Coinbase Ventures, stated in an interview with The Block that the company expects to remain 'highly active' in 2025 and beyond and is prepared to seize market opportunities. Tejwani expressed optimism about the potential positive regulatory progress that could arise after the pro-crypto Trump administration and supportive Congress in January 2025.
Tejwani revealed that Coinbase Ventures will continue to make extensive investments around the on-chain economy, focusing on 'where the best developers are putting their effort during nights and weekends.' He is particularly optimistic about the application layer, as the feasibility of internet-scale applications becomes possible with the gradual maturation of infrastructure. Areas of focus include stablecoin payments and finance, cross-applications of crypto AI, on-chain consumer applications (such as social, gaming, and creator tools), and innovations in DeFi.
At the same time, Tejwani emphasized that Coinbase Ventures has not completely abandoned the infrastructure layer, as there are still unresolved technical challenges and potential innovation opportunities in the tools space.
Binance Labs: Focused on fundamentals and user adoption
Binance Labs is Binance's $10 billion venture capital and incubation arm, and its investment director Alex Odagiu stated that regardless of market cycles, the company always acts as a 'evergreen' investor, continuously supporting startups in the web3, AI, and biotech fields.
Odagiu expects strong momentum for crypto venture capital in 2025, but emphasizes that Binance Labs will 'focus on fundamentals' rather than chasing price fluctuations or market speculation. He pointed out that projects with practical use cases, product-market fit, strong teams, and sustainable revenue models will be the most competitive.
Galaxy Ventures: Optimistic about the future of stablecoins and tokenization
Will Nuelle, general partner at Galaxy Ventures, stated that stablecoins, especially in the payment space, continue to demonstrate strong product-market fit and are a core focus of the company's capital deployment. He believes that although the pace of tokenization adoption is currently lagging behind stablecoins, there is significant investment potential in this area that is worth further exploration.
While tokenization still lags behind the adoption of stablecoins, Nuelle sees significant potential for investors. Galaxy Ventures plans to further explore these opportunities. However, Nuelle is not very optimistic about metaverse-related projects, predicting that funding will lag in 2025 due to a lack of clear adoption signs.
Hashed: Cautious positioning, expanding global investments
Simon Seojoon Kim, CEO and managing partner of Hashed, is cautiously optimistic about the market outlook for 2025. He mentioned that Trump's remarks about Bitcoin possibly becoming an asset of the U.S. Treasury might hint at a potential shift in institutional sentiment. However, he believes that funding levels are unlikely to return to the highs of 2021-2022 in the short term unless there is a 'black swan' event in the macroeconomic or geopolitical arena.
Kim believes that the market development in 2025 will be influenced by the following factors: further clarification of the U.S. regulatory environment, growth in institutional activity in Asian markets, and advancements in infrastructure driving the implementation of real applications. However, he also warns that regulatory uncertainty, macroeconomic pressures, and geopolitical tensions may inhibit market growth.
Hashed's investment focus will be on areas such as data infrastructure, institutional-grade DeFi applications, regulated stablecoin payment systems, and crypto AI infrastructure, which are considered to have clear product-market fit and mature business models. In contrast, he expects speculative GameFi projects, undifferentiated Layer 1 and Layer 2 protocols, as well as NFT platforms lacking practical revenue models to face reduced funding.
Hashed plans to complete the fundraising for its third venture capital fund in the first quarter of 2025 and plans to launch a new investment tool in Abu Dhabi to facilitate direct token investments under the local regulatory framework. Kim stated that this move aims to address the limitations of Korean-registered funds in direct token investment capabilities.
Hack VC: Betting on crypto AI, infrastructure, and DeFi
Ed Roman, co-founder and managing partner of Hack VC, expressed optimism about the prospects for crypto venture capital in 2025, expecting significant market growth, provided that no unforeseen 'black swan' events occur. He noted that a pro-crypto policy environment and the resurgence of web3 entrepreneurial enthusiasm will be key drivers of this growth.
Hack VC's investment focus is concentrated in the three areas of crypto AI, infrastructure, and DeFi. Roman explained that decentralized physical infrastructure networks (DePINs) provide a low-cost way to build multi-layer AI tech stacks, compared to traditional web2 cloud services. The potential market size in the crypto space when serving web2 clients could reach trillions of dollars.
In terms of infrastructure, Hack VC is optimistic about the development of scalability protocols, modular infrastructure, web3 security, maximum extractable value (MEV) improvements, and account abstraction technology. The maturity of these technologies has significantly improved the user experience of decentralized applications.
In the DeFi space, Hack VC believes the current moment is a 'once in a century opportunity' to reshape the financial system. Roman is particularly optimistic about stablecoin-based payments, believing their widespread practical application could create a 'trillion-dollar market.' However, the company is less optimistic about the prospects for NFTs, expecting that most NFTs will lose value, with only a few blue-chip assets maintaining their worth.
Portal Ventures: Supporting platforms that combine infrastructure and applications
Evan Fisher, founder and general partner of Portal Ventures, stated that he expects market sentiment to improve in 2025, but funding levels may struggle to return to the peaks of 2021-2022, as the macroeconomic environment during those two years was exceptional.
In an interview with The Block, Fisher stated that Portal Ventures is optimistic about platforms that can provide both infrastructure and applications. Such platforms not only allow projects to have better control over user experience but also drive the implementation of real use cases. However, he also pointed out that investments in heavier infrastructure projects may slow down, such as zero-knowledge development platforms and middleware, mainly due to these projects currently lacking sufficient customer bases and sustainable business models.
Blockchain Capital: Focused on stablecoin infrastructure and DeFi
Kinjal Shah, general partner at Blockchain Capital, expects that as market performance continues to improve, funding levels in 2025 will increase. However, she believes that the peak funding levels of 2021-2022 are unlikely to be replicated, as the growth during that period was largely driven by macroeconomic trends.
Shah stated that Blockchain Capital will continue to maintain a flexible investment strategy, focusing on several key areas, including stablecoin infrastructure, innovative distribution models, and DeFi platforms that can connect institutions with retail investors.
