Startups that can demonstrate strong product-market fit and have a real user base will find it easier to attract capital.
Author: Yogita Khatri
Translation: Deep Tide TechFlow
Quick Overview
In 2024, venture capital funding in the crypto space increased by 28% year-on-year, reaching $13.7 billion, but it has not yet returned to historical peaks.
Top 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 saw significant growth in 2024, with a year-on-year increase of 28%, reaching approximately $13.7 billion. Although this achievement is an improvement compared to 2023, and the overall market sentiment this year is relatively optimistic, it has not yet recovered to previous historical highs.
Looking ahead to 2025, top crypto venture capital firms hold a cautious yet optimistic view of 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 at firms such as Dragonfly, Pantera, Multicoin, Coinbase Ventures, Binance Labs, and Galaxy Ventures.
Dragonfly: Betting on DeFi, CeFi, and Stablecoins
Rob Hadick, a general partner at Dragonfly, stated that due to the gradual easing of the regulatory environment in the U.S., the potential for token prices to continue rising, and the accelerated inflow of institutional capital, crypto venture capital funding is expected to see significant growth in 2025. However, he also pointed out 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 outstanding founders who demonstrate clear product-market fit in decentralized finance (DeFi), scaling platforms, centralized finance (CeFi), and stablecoins/payments. While emerging areas such as crypto AI and decentralized physical infrastructure networks (DePINs) are also on their radar, Hadick noted 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, a general partner at Pantera Capital, stated that as investor confidence in pro-crypto policies in the U.S. increases, crypto venture capital funding is expected to grow further in 2025.
However, she cautioned that "bull markets do not last forever," so "it remains to be seen when we will start to see a slowdown in capital deployment next year."
Pantera is currently making extensive investments in the crypto and blockchain space, with a particular focus on crypto AI, DePINs, and new Layer 1 solutions that support more application-level functionalities.
Multicoin: Continuing to Favor the Solana Ecosystem
Multicoin Capital is increasing its focus on 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 chain metrics this year. "We expect this trend to continue, and applications and protocols in the Solana ecosystem will stand 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 and "could even fall into a prolonged decline" due to 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 better meet their needs."
Additionally, Multicoin has great confidence in stablecoins. Samani described stablecoins as "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 global demand for the dollar, and stablecoins are the most efficient way to access dollars. The design space in this area is vast, and we are still in a relatively early stage of its adoption curve."
Coinbase Ventures: Focusing on On-Chain Economy and 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 developments that may 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 in their efforts at night and on weekends." He is particularly optimistic about the application layer, as internet-scale applications are becoming feasible with the 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: Focusing on Fundamentals and User Adoption
Binance Labs, the $10 billion venture capital and incubation arm of Binance, has its investment director Alex Odagiu stating that the company consistently acts as a "evergreen" investor, continuously supporting startups in the web3, AI, and biotechnology sectors, regardless of market cycles.
Odagiu expects crypto venture capital to maintain strong momentum in 2025 but emphasizes that Binance Labs will "focus on fundamentals" rather than chasing price fluctuations or market hype. He noted that projects with real 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, a general partner at Galaxy Ventures, stated that stablecoins, especially in the payments sector, continue to demonstrate strong product-market fit and are a core focus of the company's capital deployment. He believes that while the adoption of tokenization is currently lagging behind that of stablecoins, the investment potential in this area is significant and worth further exploration.
Although tokenization still lags behind stablecoin adoption, Nuelle sees tremendous potential for investors. Galaxy Ventures plans to further explore these opportunities. However, Nuelle is less optimistic about metaverse-related projects, predicting that funding will lag in 2025 due to a lack of clear adoption signs.
Hashed: Cautious Deployment and Global Investment Expansion
Simon Seojoon Kim, CEO and managing partner of Hashed, holds a cautiously optimistic view of the market outlook for 2025. He mentioned that Trump's comments about Bitcoin potentially 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 a "black swan" event occurs 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, increased institutional activity in Asian markets, and advancements in infrastructure driving real-world applications. However, he also warned that regulatory uncertainty, macroeconomic pressures, and geopolitical tensions could suppress 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, and NFT platforms lacking real 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 intends to launch a new investment tool in Abu Dhabi to facilitate direct token investments in accordance with local regulatory frameworks. Kim stated that this move aims to address the limitations of Korean registered funds in their ability to make direct token investments.
Hack VC: Betting on Crypto AI, Infrastructure, and DeFi
Ed Roman, co-founder and managing partner of Hack VC, expressed an optimistic outlook for crypto venture capital in 2025, expecting significant market growth, provided that no unforeseen "black swan" events occur. He noted that the pro-crypto policy environment and the resurgence of entrepreneurial enthusiasm in web3 will be key drivers of this growth.
Hack VC focuses its investments on three main areas: crypto AI, infrastructure, and DeFi. Roman explained that decentralized physical infrastructure networks (DePINs) provide a low-cost way to build multi-layer AI technology stacks, relying on GPUs, 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 technologies. The maturation of these technologies significantly enhances the user experience of decentralized applications.
In the DeFi sector, Hack VC believes that the current moment represents a "once-in-a-century opportunity" to reshape the financial system. Roman is particularly optimistic about stablecoin-based payments, believing that their widespread practical applications could give rise to a "trillion-dollar market." However, the company is less optimistic about the prospects of NFTs, predicting that most NFTs will lose value, with only a few blue-chip assets able to retain their worth.
Portal Ventures: Supporting Platforms with Both 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 due to the unique macroeconomic environment of those years.
In an interview with The Block, Fisher mentioned that Portal Ventures is optimistic about platforms that can provide both infrastructure and applications. Such platforms not only allow projects to better control user experience but also drive the realization of practical use cases. However, he also pointed out that investments in heavier infrastructure projects may slow down, such as zero-knowledge development platforms and middleware, primarily because these projects currently lack sufficient customer bases and sustainable business models.
Blockchain Capital: Focusing on Stablecoin Infrastructure and DeFi
Kinjal Shah, general partner at Blockchain Capital, anticipates that as market performance continues to improve, funding levels in 2025 will see an uptick. However, she believes that the peak funding levels of 2021-2022 are unlikely to be replicated, as that growth 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.
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