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ArkStream Capital: Why Is It Difficult for Crypto VCs to Outperform BTC?

2025-09-03 14:00
Read this article in 91 Minutes
The project's journey from fundraising to TGE may have been extended, but this has not resulted in a higher success rate. Many projects lack real value and long-term viability in the market.
Original Title: "ArkStream Capital: Crypto VC Rebirth Guide - Why Beating BTC Is Hard"
Original Source: ArkStream Capital


How long has it been since you last heard the term Web3? From the "Web3" hype back to the "cryptocurrency" narrative, institutional investors in the cryptocurrency market are experiencing a drastic reshuffling, and we are witnessing it all.


The result of this "narrative rewind" is that Bitcoin and Ethereum continue to hit new highs, while the altseason is delayed. HODLing may just be wishful thinking, as a harsher reality unfolds: starting in 2022, a comprehensive downturn in primary market investment returns is continuously hitting VC practitioners and investors who adhere to the "Vintage Investment Theory." This article will systematically analyze the investment and financing data and market structural changes from early 2022 to the second quarter of 2025 over these three years, to uncover the underlying reasons behind the dramatic shift in the cryptocurrency primary market from peak prosperity to return contraction.


We attempt to answer two core questions:


1. What challenges are current Crypto VCs facing?


2. Under the new cycle logic, how should investment institutions participate in this market?


As a long-term participant in the primary market, ArkStream Capital observed that since the 2022 peak, the market has experienced a dramatic capital contraction and a cooling of financing activities, hitting a low point in 2023. Although the overall financing scale rebounded in Q1 2025, the incremental increase was mainly concentrated in a few mega-financing events. Excluding these exceptional cases, market activity remains sluggish.


In parallel, there has been a shift in VC strategies and preferences:


· Investment stages are shifting from early-stage to late-stage, with a significant risk aversion: Data shows that the proportion of early-stage financing (Seed and PreSeed) remained above 60% during the period from 2022 to the third quarter of 2023 (peaking at 72.78%), but then began to fluctuate and decline. By the first quarter of 2025, the percentage of early-stage financing transactions fell below 50% for the first time since 2022, dropping to 47.96%.


· The narrative has shifted from growth in applications such as Social/NFT/Game to areas emphasizing utility and long-term value, such as DeFi, infrastructure, and RWA. A comparison between Q2 2022 and Q2 2025 shows a drastic drop in funding for NFT/Games/Social from 129 deals to 15 deals; whereas the Infrastructure/DeFi/CeFi track accounted for 85.8% of the total funding deals in Q2 2025 (97 out of 113), becoming the absolute core of the market.


· The "paper gains" in high FDV (Fully Diluted Valuation) models are being debunked by the market: An analysis of 75 investments shows that the market performance has shifted, with 46 deals having over 10x returns at their peak, and only 6 deals surviving the steep decline; furthermore, 24 investments (32%) and 18 projects (42.85%) now have valuations below their private sale prices.


· Even Binance's "listing effect" is losing its impact, with a "pump and dump" trend becoming the new normal: Data indicates that although 25 projects still experienced more than a 10x price surge on their listing day in 2024, by 2025, the number of projects falling below their listing price within 7 days after listing had surged to 42, signaling the failure of a valuation-driving model solely reliant on endorsements from top exchanges.


· Despite projects seeing an extension in the timeline from funding to TGE (Token Generation Event), this has not led to a higher success rate: Data reveals that out of over 17,000 assets recorded on Coingecko, the trading volume for assets beyond the top 1500 is nearly negligible, and even top-tier VC-funded projects like Polychain Capital have a high failure rate of 26.72%.


· The VC investment logic in the crypto primary market has become obsolete: Data shows that in the harsh reality where up to 77% of projects can't launch their tokens, only 5.5% of top projects eventually get listed on Binance. However, the average return on these top projects is only 2-5x, far from enough to cover the losses from the remaining 94.5% of failed investments, let alone meet the 4.3x return required by a simplified breakeven model. This renders the portfolio incapable of achieving profitability mathematically.


· Note: The data analysis results are based on top-tier crypto VC investment cases from Europe, the United States, and mainstream exchanges. The selected samples are representative but do not cover the entire industry, as detailed in the following text.


We believe that the downward trend in returns is not only a result of the tightening liquidity as part of the interest rate cycle but also reflects a transformation in the underlying paradigm of the crypto primary market: shifting from valuation-driven to value-driven, from broad net-casting to high certainty, and from chasing narratives to betting on execution capability. Understanding and adapting to this paradigm shift may become a necessary prerequisite for achieving excess returns in future cycles.


Primary Market Data Overview: Heat Map and Cycle Evolution


Global Crypto Primary Market Financing Overview


Primary market investment and financing data serves as a gauge of whether the market is willing to pay for innovative ideas. The higher the investment and financing data, the more risk capital is willing to bet on the future development of this industry. Whether it's the composability Lego on decentralized finance (DeFi), the Web3 vision advocating for data that is "readable, writable, and ownable," or the continuous refinement of infrastructure from privacy protection, distributed storage, to scalability, all rely on risk capital's continued investment in this market. Accompanying risk capital is the influx of talent, and the prosperity of the primary market often manifests in the continuous innovation and entrepreneurship talent in this industry.


This data reached its peak in Q1 2022, with a single-quarter financing amount reaching $12.4 billion and 588 financing rounds. However, since then, the market has sharply declined, entering a continuous downward cycle, with both total financing amount and activity level plummeting. By Q4 2023, quarterly financing had fallen to $1.9 billion, with 255 financings, hitting a cyclical bottom. Despite a slight rebound in 2024, the overall market has remained at low levels.


The financing data for Q1 2025 seemingly showed signs of recovery: the quarterly financing total rose to $5.2 billion, and the number of financings increased to 271. However, this "recovery" is difficult to withstand detailed analysis. In that quarter, the Abu Dhabi sovereign wealth fund, MGX, made a strategic investment in Binance (around $2 billion), accounting for over 40% of the total, an anomaly driven by a single event. In addition, World Liberty Financial's $550 million ICO also significantly inflated the overall data. If the above ultra-large financings are excluded, the actual financing scale of crypto-native projects in the first quarter of 2025 is only about $2.65 billion. As we enter Q2 2025, the downward trend continues. Financings of projects like SharpLink, BitMine, Digital Asset, and World Liberty Financial need to be handled separately and should not be seen as the norm in the crypto venture capital market. It can be seen that from Q1 2025, there has been a clear divergence between crypto-native venture capital and traditional finance, with crypto-native venture capital continuing to contract, while traditional finance funds have swiftly entered the scene, flexing their muscles in the equity market. Behind the seemingly growth is the acceleration of capital towards low-risk preference projects, and the overall venture capital activity in the market has not truly recovered.


Figure: 2022–Present Quarterly Financing
Data Source: RootData Financing Data Panel


This downward trend is significantly negatively correlated with Bitcoin's market dominance. While Bitcoin has experienced a significant increase since early 2023, the activity in the primary market has not rebounded in sync, breaking the past cycle of BTC price increase and intensified venture capital participation.


Figure: 22 Year-to-Date Bitcoin Market Value Dominance


This means that the change in altcoin market enthusiasm is no longer solely pegged to Bitcoin's price; instead, as Bitcoin rises, market confidence in altcoins continues to erode. The decline in 2022 reflects a macro pullback, the low point in 2023 reflects a breakdown in market confidence. The rebound in Q1 2025 is primarily driven by individual projects with strategic value or a moat of capital protection, marking the entry of the primary market into a new phase of "selected centralization." The era of "letting a hundred flowers bloom" is no more, and the wave centered around the "Web3" narrative is receding.


For VCs, this means that the era of "casting a wide net" is phasing out, reassessing certainty, strengthening fundamental screening, and evaluating exit strategies have become the new paradigm. In a context of overall declining returns, Bitcoin's rise without a corresponding inflow of funds, VCs can no longer rely on the natural lift of a macro bull market but should focus on technological barriers, business model resilience, and actual user value to meet investors' higher demand for stable returns.


Mainstream Institutional Investment Activity Analysis


In an environment where the overall market is not as strong as expected, VCs still active in the cryptocurrency market must change their tactics to survive, shifting from "all roads lead to Rome" to finding fixed strategies with higher certainty.


Firstly, the preference for investment rounds is shifting from early-stage rounds to later-stage projects. In Q1 2025, the percentage of early-stage financing rounds fell below 50% for the first time since 2022. This change indicates: in an environment where exit paths are increasingly uncertain, and top projects occupy resources, institutional preference for "certainty" has significantly increased, leaning more towards mature projects with validated products and clear revenue sources. At the same time, the percentage of financing rounds in the PreSeed and Seed stages has decreased, although it still remains in a relatively healthy range overall, showing that early-stage entrepreneurial vigor persists, but fundraising thresholds have significantly increased.


Figure: Quarterly Funding Round Distribution (%)
Data Source: Financing records collected by RootData, grouped and summarized by quarter and round


Secondly, investment preferences in specific sectors are becoming more concentrated. Starting from Q1 2024, the percentage of funding projects in encryption-native non-financial application sectors such as Social, Games, NFT, and DAO fell below 50% for the first time, marking the end of the "concept-driven" narrative. In its place, a return to the DeFi and infrastructure sectors is observed. These sectors emphasize the practical application value of protocols and their sustainable revenue-generating capabilities, shifting capital focus from B2C narratives to platform projects with B2B business models. Meanwhile, although the CeFi sector may have a lower presence in the market narrative, its funding volume remains high, reflecting the capital recognition of its funding needs as a cash-flow-intensive business.

Figure: Quarterly Sector Funding Trend
Data Source: Funding amounts for various sectors as recorded by RootData


Another impact of the shift in investment preferences is a significant reduction in available paths for entrepreneurs. If entrepreneurship in the cryptocurrency industry used to be an open-ended question, it is now more like a "structured essay question," with only Infra, DeFi, and RWA as viable options. Ultimately, success lies in who can emerge from the red sea within already established business models.


For VCs, this trend implies that: the investment research system needs to closely follow the industry's structural changes, dynamically reallocate time and resources, prioritize projects with deep value-capture capabilities, rather than short-term, trend-driven topics.


Project Lifecycle and Exit Window Analysis


Project TGE and FDV


Project Data Description: This analysis is based on top-tier crypto VC investments in Europe, the US, and exchanges, involving institutions such as a16z, Coinbase Ventures, Multicoin Capital, YZi Labs, OKX Ventures, Polychain Capital, Paradigm, and Pantera Capital. (Source data can be found in the appendix in the VC Investments table, VC-Backed Listings on Binance: Spot Returns, VC-Backed Listings on Binance: Spot Returns Pivot)


Data Filtering Criteria:


· Investment Count Priority: The same project may go through multiple rounds of funding, and the valuation differences between different rounds are significant, directly impacting investment returns. Therefore, treating the different rounds of funding for the same project as independent investment counts is crucial to more accurately reflect investment activity.


· Binance Project Priority: Binance, as one of the largest global exchanges, possesses extensive liquidity and market coverage capabilities. To comprehensively reflect market performance, only projects listed for spot trading on Binance are selected as Star Projects.


· Data Accuracy: Investments disclosed after token issuance are considered OTC (Over-The-Counter) trades and are not included in the venture capital category to ensure data accuracy and consistency.


· Exclusion of Insufficient Data Dimension: Projects lacking disclosure of investment amount and valuation are not included in statistical calculations due to insufficient data dimension.


In the crypto primary market, the project's valuation system is a core variable affecting VC returns. Particularly, the market performance of the token price post-TGE (Token Generation Event) has become a key indicator of measuring exit efficiency. However, over the past decade, the crypto industry's funding through project valuation or FDV (Fully Diluted Valuation) has become ineffective in the current cycle. This has rendered investments that could have originally brought tens or even hundreds of times the book proceeds to be somewhat insignificant upon exit.


Meanwhile, whether in traditional VC or crypto VC, project failures are the norm. For VCs, as long as a few Star Projects can achieve high returns, it is enough to significantly boost overall returns. Therefore, the core standard by which VC performance is measured is not the investment success rate but whether those Star Projects were captured.


By analyzing the post-listing FDV, opening FDV, peak FDV, and current FDV of projects, and comparing them with publicly available information on investment institutions' initial costs, we further calculated the investment return performance of these institutions.


Figure: Investment Return Multiples


The above figure illustrates the market performance of mainstream VC-invested projects post-token issuance, revealing the severity of the current investment return situation. By calculating the ratios of Opening FDV/Private Sale Valuation, Peak FDV/Private Sale Valuation, and Current FDV/Private Sale Valuation, it is evident that a considerable number of investment cases correspond to projects whose Current FDV is already below, or significantly below, the Private Sale Valuation. Additionally, the number of projects with excess returns based on Opening and Peak FDV/Valuation is showing a sharp decline over time.


The statistical results show that out of 75 investment cases and 42 projects (detailed data can be found in the appendix):


· Projects with an Opening FDV/Private Sale Valuation exceeding 100% totaled 71 transactions/40 projects, with 28 transactions/18 projects having Opening FDV returns exceeding 1000%;


· Projects with a Peak FDV/Private Sale Valuation exceeding 100% totaled 73 transactions/41 projects, with 46 transactions/29 projects having Peak FDV returns exceeding 1000%.


However, currently, only 6 investment transactions/4 projects have a Current FDV/Private Sale Valuation exceeding 1000%, while 24 transactions/18 projects have a Current FDV/Private Sale Valuation below 100%, accounting for 32% and 42.85%, respectively. This means that nearly one-third of investment transactions and over four-tenths of investment projects are currently performing below even the private sale stage valuation expectations.


It is worth noting that some star projects, even after listing on the most liquid Binance exchange, still cannot match the high valuation of the private sale stage. This phenomenon reflects the severe challenge the current market environment poses to project valuation and highlights the downward pressure on investor returns.


Furthermore, based on the commonly set "1+3" lock-up period by major exchanges (i.e., one year lock-up, three years linear unlock), the amount that final investors can exit is very limited. This further illustrates that although some projects achieved a high market valuation early on, their subsequent performance cannot support investor expectations.


This "paper valuation bloat" is particularly common in the crypto primary market: projects tend to use high FDV pricing in early funding rounds in exchange for better valuations and terms; however, once they enter the TGE circulation stage, insufficient market demand and continuous token unlocking often fail to support the original valuation expectations, leading to a rapid price drop. Data shows that the actual circulating market value of many projects is even long-term below the private sale round entry valuation, directly compressing VC exit multiples.


Essentially, a high FDV typically masks two core issues:


· The lack of "on-paper wealth" supported by real market liquidity, making it difficult to realize gains in the secondary market;


· Token release schedules severely disconnected from market demand, leading to rapid selling pressure post-TGE, further suppressing prices.


For VCs, if they continue to use FDV as a core pricing anchor in primary market investments, they may significantly overestimate the achievable liquidity returns of projects, thereby overestimating the portfolio's paper value.


Therefore, in the current market cycle, judgment of project valuation must return to fundamentals: including the intrinsic closed-loop design of the tokenomics, supply-demand dynamic balance, vesting schedule, and the support of real buyer liquidity post TGE. We believe that FDV should not be seen as the "valuation ceiling," but more like a "risk cap." The higher the FDV, the greater the difficulty of realization, and the higher the risk of investment return discount.


Shifting the focus from "high FDV paper premium" to "realized exitable circulation value" is a necessary evolution of the VC investment methodology at the current stage.


Performance of Projects Listed on Top Exchanges


In the crypto primary market, listing on top exchanges was once seen as a sign of project success and a VC exit window. However, this "blessing effect" is significantly waning.


An analysis of the price fluctuations of projects listed on multiple exchanges from January 2022 to June 2025 shows that the listing performance varies significantly among different exchanges. However, a common trend is that the vast majority of projects experience a rapid price drop shortly after listing, even falling below the listing price. This reflects that the exchange's price empowerment effect on tokens is gradually diminishing.


The chart below shows the price fluctuation statistics of spot projects listed on Binance from 2022 to Q2 2025.


Chart: Binance Opening Performance Since 2022


This "rise and fall" phenomenon is largely due to the pre-listing overincentivization and artificially induced liquidity frenzy. Some projects rapidly increased TVL and user attention through large-scale airdrops or "point mining" but introduced significant selling pressure in the early TGE. For example, this year's Berachain project saw a rapid decrease in user retention after the TGE, leading to a sharp decline in token price.


More importantly, exchange listing is no longer the "endpoint event" of project valuation but has become a continuous test of project market performance. In 2025, Binance adjusted its listing logic, launched the Alpha platform as an early showcase channel, and introduced a higher standard tracking mechanism, focusing on evaluating the activity, liquidity quality, and price stability of listed projects. If a project cannot maintain real user growth and long-term narrative stickiness, even if it obtains a listing opportunity, it may be marginalized or delisted.


This trend implies that the liquidity exit window of the primary market is transitioning from being "node-driven" to "process-driven." Relying solely on listing to create a short-term valuation recovery window is becoming ineffective. For VCs, this requires a longer-term post-investment support and value capture logic, where projects need to rely on solid product strength and market validation to sustain the token's performance in the secondary market, rather than a single event-driven "valuation realization."


Funding to TGE Cycle and TGE Success Rate


Project Data Insight: This analysis uses top-tier crypto VC investments in Europe and the US, involving institutions such as Coinbase Ventures, Multicoin Capital, YZi Labs, OKX Ventures, Polychain Capital, and Pantera Capital. (Source data see the VC Portfolio Failure & Non-Listing Rate table in the appendix)


Data Selection Criteria:


· Priority on Investment Count: The same project may go through multiple rounds of funding, and the valuation differences between different rounds significantly impact investment returns. Therefore, considering different funding rounds of the same project as independent investment counts to more accurately reflect investment activity.


· Binance Projects Priority: Binance, as one of the world's largest exchanges, has extensive liquidity and market coverage. To more comprehensively reflect market performance, only projects listed for spot trading on Binance are selected as star projects.


· Data Accuracy: Investments disclosed after the token listing are considered OTC (over-the-counter) and not included in venture capital categorization to ensure data accuracy and consistency.


· Exclusion of Insufficient Data Dimension: Projects without disclosed investment amounts and valuations are not included in statistical calculations due to insufficient data dimensions.


From the data provided in the previous section, the final performance of star projects often turns out to be disappointing. So, how do the performances of the majority of other projects look? Can they redeem the face of crypto VCs? In this bottom-up industry, is it possible that the ultimate winner is those "hidden gems" that were initially unknown and only revealed their value over time? The answer is not optimistic. These projects are more likely to face the reality that investors cannot find a suitable exit path.


In traditional venture capital, seed funding typically takes 6–12 months, while Series A funding takes 9–18 months. In the crypto industry, due to the flexibility of token financing mechanisms (such as the rapid deployment of ERC-20 or BEP-20), there was once an extreme model of "fundraising completed in a few days, TGE completed within a few weeks." However, as regulatory pressure intensifies and the market gradually cools down, project teams are increasingly focusing on product polishing and user growth, significantly lengthening the average cycle from funding to TGE for crypto projects.


While an extended cycle helps project teams better prepare, it has not fundamentally improved project quality. Data shows that since 2021, Coingecko has recorded a total of 17,663 crypto assets, with the trading volume of assets ranked below 1500 in market cap almost negligible, indicating that a large number of projects lack real value and sustainable vitality in the market.


Even more concerning is that the high failure rate is not only present in grassroots projects but is also prevalent in institutionally supported projects. Data shows that as of 2024, approximately 20.8% of VC-backed projects have ceased operations, and even top-tier institutions have not been immune. For example, the failure rate of projects supported by Coinbase Ventures is 21.6%, while projects supported by Polychain Capital have a failure rate as high as 26.72%. This phenomenon indicates that the current market's screening mechanism for crypto projects still needs further improvement, and the success rate of institutional investments urgently needs to be enhanced.


Figure: VC Portfolio Failure & Non-Listing Rate


Furthermore, although there is a significant positive correlation between funding scale and project survival rate, there are still many star projects with funding exceeding $50 million that have been shut down. For example, projects such as Mintbase, which received $13.5 million in funding, MakersPlace with $30 million, and Juno with $21 million, have all ceased operations. This indicates that abundant capital is not a sufficient guarantee of project success; factors such as market environment, operational capabilities, and product competitiveness are equally crucial.


These changes have placed higher demands on VC investment strategies. Transitioning from the past "token generation event (TGE) first, development later" acceleration model to a calmer cycle of "development first, then listing," means that projects need to undergo a longer validation period before listing. Investors need to more deeply evaluate a project's technical implementation capabilities, team execution capabilities, and product-market fit to enhance post-investment survival rates and exit feasibility.


Primary Market Investment Returns Decline


Structural Analysis of Return Decline


The investment returns in the cryptocurrency primary market have significantly declined, not only as a result of the tightening liquidity cycle but also as a result of the combined effects of various structural factors. These changes have profoundly affected the market's operational logic and pose new challenges to investment institutions' strategies.


The Bitcoin Siphon Effect and the Plight of Altcoins


In recent years, the differentiation of fund flows has become increasingly evident. The Bitcoin dominance has continuously increased from around 40% in early 2023 to surpassing the 55% mark multiple times in 2024, establishing itself as the absolute leader in market liquidity. Meanwhile, since the approval of the U.S. Bitcoin spot ETF in January 2024, it has attracted over $100 billion in assets under management (AUM), with net inflows exceeding $30.7 billion.


Figure: Total net inflow of Bitcoin spot ETFs in 2024


In stark contrast, the primary market of cryptocurrencies has been in a slump. The total fundraising amount for 2024 was only $98.97 billion, significantly lower than the $286 billion recorded in the same period in 2022. The past trend of "Bitcoin rises, followed by altseason" has been broken, with funds highly concentrated in Bitcoin, leaving the altcoin market in a state of stagnation.


This phenomenon reflects the risk appetite of traditional financial funds. The compliant inflow of ETFs, managed by institutions such as BlackRock and Fidelity, primarily caters to clients' demand for low-risk asset allocation. These funds perceive Bitcoin as "digital gold" rather than a gateway to "Web3," hardly flowing into higher-risk altcoins and early-stage projects.


Simultaneously, the "Web3" narrative is fading. Previously hyped sectors like GameFi and SocialFi have lost their appeal due to economic model collapses and user attrition, causing the market to shift its focus to the proven value storage function of Bitcoin. This structural transformation has made Bitcoin the primary destination for funds, while the altcoin market struggles to sustain its vast project supply and valuation system.


Contraction and Concentration of Track Choices


The significant shift in crypto market investment preferences reflects VCs' pursuit of "certainty." In Q1 2025, the early-stage funding round ratio fell below 50% for the first time, signaling institutions' inclination toward mature projects. Behind this trend is the inability of up to 68.75% of projects to go live, with some top-tier institutions having a project non-launch rate approaching 80%. The exit dilemma is forcing VCs to reassess capital efficiency and prioritize projects with clear business models and moats.


Track choices are also becoming more concentrated. Since Q1 2024, the decline of "concept-driven" tracks such as Social, Games, and NFTs has been witnessed, while DeFi and infrastructure tracks are making a comeback, with VCs shifting focus to emphasize real-world application value and sustainable revenue directions.


This trend has transformed the entrepreneurial path from an "open-ended questionnaire" to a "essay question," where only a few tracks such as Infra, DeFi, and RWA are competitive, ultimately competing to see who can break out of the red sea. The centralization of market selection has not only exacerbated fund differentiation but also compressed overall returns, becoming a key reason for the decline in VC investment returns. VCs need to dynamically adjust their investment research system, focus on capturing deep value, and meet the market's demand for certainty.


The High Failure Rate of Projects and the Inefficient Conversion of Capital


Although the extended market cycle has provided more preparation time for projects, the quality of projects has not fundamentally improved. Data shows that since 2022, out of the 17,663 cryptocurrencies recorded by Coingecko, the trading volume of a large number of assets ranked beyond 1500 is almost zero, reflecting that most projects lack practical value and vitality.


More alarming is the high failure rate of projects supported by mainstream institutions. By 2024, about 20.8% of VC-backed projects have ceased operations, with top institutions such as Coinbase Ventures and Polychain Capital having project failure rates of 21.6% and 26.72%, respectively. This indicates that the advantage of capital and resources has not effectively reduced the risk of failure.


Even star projects with large funding sizes have not been able to escape the fate of closure, such as Mintbase, which raised $13.5 million, and MakersPlace, which raised $30 million, have both ceased operations.


This cycle has cleared the market with a high elimination rate, raising higher requirements for investors: transitioning from "Token Generation Event (TGE) before construction" to "validation before listing." Only by delving deep into a project's technical implementation, team resilience, and market fit can truly resilient projects be selected under the dual pressure of capital and the cycle.


Listing Does Not Equal Success: Valuation Bubble and Exit Dilemma


Being listed on a top exchange was once a symbol of success for a crypto project and investment exit, but this effect is now diminishing. Data shows that 32.89% of investment rounds and 42.85% of projects' current Fully Diluted Valuation (FDV) are below the private placement valuation, and projects with a current FDV/Private Placement Valuation ratio exceeding 1000% have dropped to zero, reflecting the market's severe challenge to high FDV valuations.


Projects initially created a book premium through high FDV financing, but the disconnect between token release schedules and market demand led to selling pressure accumulation and a rapid price decline. Some projects, though creating liquidity hype through airdrops or incentive mechanisms, struggled to maintain user retention and a long-term narrative, eventually resulting in token price collapses.


Furthermore, the listing of projects on exchanges has shifted from being a "valuation realization point" to a "long-term performance test." Top exchanges such as Binance have raised their listing standards, requiring projects to maintain real growth and price stability, or they may face delisting. This has rendered the short-term valuation recovery window ineffective, making investment exits increasingly dependent on the project's long-term market performance.


This dilemma has exposed the inherent risks of high Fully Diluted Valuation (FDV): masking liquidity issues and tokenomics imbalance, squeezing the room for investment returns. VCs need to go back to basics, focusing on tokenomics loop design and real market demand. Only solid product strength and market validation can support a project's long-term value, avoiding paper wealth from turning into an exit illusion.


Macro Environment Pressure and Venture Capital Retreat


Since March 2022, the Federal Reserve has been consistently raising interest rates, elevating the Federal Funds Rate to a high of 5.25%-5.50% within a year and a half. Additionally, the yield on the 10-year U.S. Treasury bond surpassed 4.5% in the second half of 2023, significantly increasing the attractiveness of risk-free assets and raising the opportunity cost of investing in high-risk assets. During this time window, the global capital market risk appetite has notably decreased, leading to a sharp reduction in funding support for high-risk areas like crypto projects.


The high-interest-rate environment has had a profound impact on the valuation and investment returns of crypto projects. Firstly, high-interest rates have raised the discount rate of future earnings, implying that crypto projects relying on the expected returns of long-term growth or token value would devalue due to the increased discounting cost, directly compressing the project's valuation in the secondary market. Meanwhile, as the yield on risk-free assets (like U.S. Treasury bonds) exceeds 4.5%, investors are more inclined to choose low-risk, high-return asset allocations, reducing their investment in high-risk crypto projects. This shift in fund flows further weakens the fundraising capability of crypto startups, making it difficult for many projects to secure sufficient capital support. Additionally, the undervaluation in the secondary market and reduced funds also make it challenging for investors to achieve high returns exit through the secondary market, causing the investment returns to shrink, affecting not only VC funds' returns but also weakening market confidence in the crypto sector.


VC's Moment of Truth: Can "Home Run" Returns Cover Massive Losses?


Project Data Insights: This analysis is based on the top crypto VC investments in Europe, the U.S., and exchanges, involving institutions such as a16z, Coinbase Ventures, Multicoin Capital, YZi Labs, OKX Ventures, Polychain Capital, Paradigm, and Pantera Capital. (For detailed sources, refer to the appendix tables VC Investments, VC-Backed Listings on Binance: Spot Returns, VC-Backed Listings on Binance: Spot Returns Pivot)


Data Filtering Criteria:


· Investment Count Priority: The Same project may go through multiple rounds of funding, and the valuation difference between different rounds is significant, directly impacting investment returns. Therefore, considering each different round of funding for the same project as an independent investment count to more accurately reflect investment activity.


· Binance Project Priority: As one of the world's largest exchanges, Binance has extensive liquidity and market coverage. To more comprehensively reflect market performance, only projects listed on Binance for spot trading are selected as Star Projects.


· Data Accuracy: Investment disclosures made after a token's launch are considered Over-the-Counter (OTC) transactions and are not included in the venture capital category to ensure the accuracy and consistency of data statistics.


· Exclusion Due to Insufficient Data Dimensions: Projects that do not disclose investment amounts and valuations are not included in statistical calculations due to insufficient data dimensions.


In the venture capital field, a high failure rate is the norm. The success or failure of a VC fund does not depend on avoiding project failures but on whether one or two "home run" projects can appear in its portfolio. These successful projects need to bring returns of at least 10 times or even higher to offset the losses of many failed projects to ultimately achieve the fund's overall profit.


In the current crypto market, successfully launching on Binance Spot has become the golden standard for determining if a project has truly "made it." Therefore, the core issue in evaluating primary market investment returns can shift from "Will the project die?" to: Of the investment portfolio, what percentage will ultimately launch on Binance? Are the returns from these projects sufficient to cover the massive losses from projects that did not make it to the exchange?


Let's take a look at the cruel funnel-like filtering process from investment to Binance listing through a set of macro data from the two dimensions of "Investment Count" and "Project Count":


Using a portfolio consisting of 1026 investments corresponding to 757 unique projects as an example, its overall performance is as follows:


The Vast Majority of Investments Languish (Not TGE'd)


Among all investments, a staggering 747 investments (72.8%) corresponding to 584 projects (77.1%) have not completed the Token Generation Event (TGE) and exchange listing. This means that over 70% of investments and projects are still at the conceptual stage, yet to enter public market circulation, facing high uncertainty.


A Few Successfully "Launched" (Completed TGE)


Only 279 investments (27.2% of the total), corresponding to 173 projects (22.9% of the total), successfully underwent TGE and entered the secondary market. This marks the first step for projects to provide an exit for early investors, but success is still a long way off.


Final Gauntlet (Binance Listing)


· At the top of the pyramid, only 76 investments ultimately led to 42 projects successfully landing a spot on Binance Spot.


· This means that even among projects that have successfully "launched," only approximately a quarter (calculated by project count as 24.3%, and by investment count as 27.2%) could access Binance, the top-tier liquidity market.


· Looking at the entire investment portfolio, the success rate is minimal:


· Calculated by investment count, the proportion that ultimately listed on Binance is only 7.4%.


· Calculated by project count, the proportion that ultimately listed on Binance is even lower at 5.5%.


For any crypto fund, the probability of their investments leading to a Binance listing is only around 5.5%. This means that over 94.5% of investment projects fail to deliver the highest level of returns.



Now let's examine how these "chosen few" of 5.5% have performed. The following is an estimated average return on investment for projects backed by top-tier institutions that successfully listed on Binance Spot:



As seen, even for the world's top VCs, the average ROI for projects listed on Binance ranges from 2x to 5x, far from the "10x" myth needed to cover losses.


Let's do the math. If a fund wants to break even, an extremely simplified model is assumed: if 77% of projects go to zero, the remaining 23% of projects need to generate an average return of at least 4.3x (1 / 0.23 ≈ 4.3) to just about break even.


However, reality is:


· The proportion that can list on Binance is too low: only 5.5% of projects can achieve top-tier liquidity.


· Low Returns from Binance Listings: An average return of 2-5x is far from enough to cover the losses of the other 95.5% of projects that fail. Not to mention those projects that did not list on Binance and only listed on regular exchanges, which have even lower returns and liquidity.


The harsh reality is that even for top-tier funds, looking at all investment projects as a whole, the current Binance listing rate and post-listing return multiple are no longer sufficient to cover the losses from the many other failed projects in their portfolios.


This ultimately leads to the three major challenges that primary market investment institutions must face: a decrease in absolute returns, a lower listing multiple, and depleted liquidity. The investment logic of the entire industry is shifting from a "cast a wide net, gamble on a hit project" model to a deeper evaluation of the intrinsic value of projects, team execution, and market fit.


Returning to Basics as the Tide of the "Web3 Revolution" Recedes


The previous sections clearly revealed the market's "outcome," namely the comprehensive decline in primary market returns and the failure of the 2017-2022 Crypto Vintage investment logic. However, to truly understand this upheaval, we must explore the "cause" behind it. We believe that the current dilemma faced by crypto VCs is not a simple cyclical adjustment but a profound paradigm shift. The essence of this revolution is that after a tumultuous round of mass exploration, the crypto industry is finally returning from the grand narrative of "Web3" to its true core value—as a disruptive force building the next-generation financial infrastructure.


Wrong Skill Tree: The Bankruptcy of the Web3 Narrative and the End of Growth


For the past few years, the entire industry has been immersed in the dream of "Web3." This dream depicted a new internet that is decentralized, where users have data sovereignty, and can stand on equal footing with Web2 giants. Under this narrative, the logic for VCs was simple and clear: find the next SocialFi, GameFi, or NFT platform that can achieve exponential user growth, capture a market worth hundreds of billions to trillions through disruptive application-layer innovation.


However, this path was ultimately proven to be off course.


The End of Growth: The User Bottleneck of the Web3 Narrative


The premise of all disruptive stories at the application layer is exponential user growth. However, the reality is that the growth of the crypto industry has reached a bottleneck. Complex wallet interactions, difficult private key management, and a lack of real-world use cases have kept crypto applications from breaking out of niche circles and reaching mainstream audiences. When the myth of user growth shatters, the overvalued models built upon it collapse. The once highly touted race tracks now lie in ruins.


Value Misalignment: When the "Revolution" Strays from Core Strength


The core strength of blockchain technology lies in its financial attributes: efficient asset creation, permissionless global distribution, and programmable automated interactions. It is fundamentally meant to alter production relationships, especially the production and circulation of financial assets. However, the majority of past "Web3" projects have focused on less than 20% of this core aspect, with the rest attempting to use blockchain as a "financial hammer" to forcefully address "non-financial nails" like social and gaming. This misalignment of value has led to significant resource waste and failed explorations. VCs have propelled this grand social experiment, and while the results may be less than satisfactory, they are still highly valuable—it has used real money to validate which paths are dead ends.


Return to Core: The Essence of the Crypto Industry Is to Build the Next-Generation Financial Infrastructure


If, for now, the doors of Web3 cannot lead to the future, where does the true value proposition of the crypto industry lie? The answer is becoming increasingly clear: returning to its technological roots, focusing on building a brand-new, efficient, globalized financial infrastructure.


Unlike the "start-from-scratch" approach of the Web3 revolution, the goal of building financial infrastructure is more practical and fundamental: it does not aim to create a detached virtual world but rather to use blockchain technology to provide a set of superior "tracks" and "rules of the road" for the flow of real-world assets and value.


This conveniently explains the trends observed in the earlier data:


· DeFi's Return to Infrastructure: These are the new financial "tracks" themselves, the cornerstone of value circulation, and their importance is self-evident.


· Rise of RWA (Real-World Assets): This is the key to allowing real-world "goods" (such as bonds, real estate, credit) to travel on new "tracks," bridging the virtual and real, and empowering the efficiency of blockchain for the real economy.


· Continued Financing Capability of CeFi (Centralized Finance): As the "interchange station" between the old and new financial systems and the primary entrance and exit, its cash flow value is highly favored by capital markets when the market returns to rationality.


As the industry's development direction shifts from "Web3 applications" to "financial infrastructure," the entire evaluation system also changes. The valuation models that relied on vague narratives and user growth expectations in the past are abandoned, replaced by a value assessment framework closer to traditional infrastructure, emphasizing system stability, transaction efficiency, asset security, and sustainable business models. This is the fundamental reason for the current overall downward adjustment in the valuation system.


Participant Transformation: From "Believers" to "Rational Actors"


In the early stages of any emerging industry, it is driven by internal, idealistic "believers." They are embracers of risk, creators and propagators of new narratives, willing to foot the bill for high-risk, high-reward dreams.


However, with the approval of a Bitcoin ETF, the crypto industry is transitioning irreversibly from a niche geek community to the mainstream financial market. The structure of the industry's participants has undergone a fundamental shift.


· Shift in Funding Sources: Traditional financial giants represented by BlackRock and Fidelity are entering with regulated funds. They are not pursuing the speculative myth of hundredfold returns but a stable asset allocation. In their eyes, Bitcoin is "digital gold," not a ticket to Web3.


· Change in Investor Mindset: After enduring a brutal bear market cycle, market investors have also transitioned from fervent speculators to more cautious "rational actors." They are beginning to focus on the project's fundamentals, assessing its intrinsic value, rather than blindly chasing the next hot trend.


This transformation from "believers" to "rational actors" is not an isolated case; it has a strikingly similar classic case in the development history of Web2: the Internet bubble around 2000.


At the peak of the bubble, the market's "believers" firmly believed that “he who gets the eyeballs gets it all.” They didn't care about profits, only about user click rates and grand narratives. A typical example of this is Pets.com. It had a disruptive story of selling pet supplies online, successfully went public and raised funds, but due to completely overlooking the high logistics costs and basic business logic, it quickly went bankrupt after burning through investments. Pets.com's failure was not because the vision of the Internet was wrong but because it only had the fervor of "believers" and lacked the business core of "rational actors."


After the bubble burst, capital dried up, and the market returned to rationality. The core question for investors shifted from "How much is your user growth?" back to the most basic "How do you make money?" It is in this market dominated by "rational actors" that true giants emerged. Amazon, despite a steep stock price drop, survived due to the "heavy asset" moat of warehousing and logistics it built offline; Google, on the other hand, successfully went public in 2004 with its clear, efficient profit model AdWords, ushering in a new era.


The mirror of history clearly reflects the present: today, the Web3 projects that fail due to their economic models not closing the loop are like yesterday's Pets.com; while DeFi, infrastructure, and RWA projects currently favored by capital are akin to Amazon and Google back then. Their value is rooted in sustainable, verifiable business logic, rather than just a beautiful story.


This shift in participants is a necessary step in the industry's journey to maturity. When the market's dominant force transitions from "believers" to "rationals," those overvalued bubbles built on faith and consensus are inevitably squeezed out. Only those projects that can provide real, measurable value will be able to achieve a reasonable valuation and market recognition in the new value system.


In conclusion, the current primary market dilemma is a course correction for the industry on its development path. It marks the end of an era—an era driven by grand narratives and boundless imagination; it also signals the beginning of a new era—a era led by real utility, sustainable business models, and rational capital. For VCs in the midst of this transformation, understanding and adapting to this underlying logic shift will be key to navigating the cycles and securing future success.


Investment Logic Transformation Amid Value Reassessment


The market has brutally declared that a business model relying solely on "getting listed on Binance" as an exit strategy is not an investment but a gamble. As secondary market liquidity premiums vanish and primary market valuation bubbles burst, the entire industry's value chain is undergoing a painful yet necessary reassessment.


However, this is by no means a reason for pessimistic exits. On the contrary, this is the golden moment for top-tier investors to recalibrate their stance with rigor and patience to capture real value. The goal is no longer to chase the next hot token but to invest in and nurture the "Stripe or Uber of the crypto world."


From the VC perspective, in the post-AI era, the marginal effect of capital is diminishing, the capital-intensive effect is declining, and the costs associated with funding for nurturing/expanding markets/R&D in the past will decrease with AI development. Thus, the value of VCs is no longer simply about putting in money but about endorsement and branding. This will result in the disappearance of VCs that can't actively identify value opportunities and merely follow the money to the tail end.


From "Narrative-Driven" to "Business-Driven"


Over the past few years, VC investments have overly relied on "narratives": ZK, Layer2, GameFi, SocialFi, NFT... but most projects cannot prove themselves in user retention and actual revenue.


The core question in the future is no longer "how many users do you have" but:


· Who are these users?

· Are they willing to pay for real pain points?

· If the token rewards are removed, will they still stay?


Truly resilient projects often have stable on-chain transactions and fee income, deriving their momentum from real demand rather than subsidies.


Case Study: Ethena


· Launched the stable asset USDe in 2024, with a circulation exceeding $3 billion within six months, becoming one of the fastest-growing stablecoins;


· The core mechanism is a Delta-Neutral structure of hedging perpetual contracts, stabilizing real yields throughout market cycles;


· Users include not only retail investors but also institutions, market makers, and hedge funds, with demand driven by "hedging and stable yield" rather than short-term incentives;


· The revenue model is directly linked to the derivatives market, with annualized returns surpassing 20% in 2024, gradually solidifying as protocol-level cash flow.


This is the virtuous cycle of "user demand - real income - protocol value," which is also the reason Ethena can stand out in the competitive stablecoin market.


"Ballast" Cash Flow


In future investment portfolios, more countercyclical cash flow protocols or applications are needed.


· Compliance and Security API Services: Chainalysis had a revenue exceeding $200 million in 2022, with a valuation reaching $8.6 billion at one point;


· Web3 Infrastructure SaaS: Entities like Alchemy, Infura, etc., charge subscription fees in USD, decoupled from coin price, offering high stability;


· On-chain and off-chain hybrid valuation: Reference both on-chain metrics like TVL, protocol revenue, and traditional equity tools like DCF, P/E.


This model provides a value anchor for investment portfolios, serving as the "ballast" of the portfolio.


Actualizing the Return Curve


The return curve of crypto VCs is transitioning from the "hundredfold in two years" J-curve to the "tenfold in eight years" step-curve.


Future exit paths will be more diversified:


· Acquisition by tech giants;

· Listing on compliant STO platforms;

· Mergers and acquisitions with traditional industries.


This implies longer cycles and deeper patience.


Signals Are Clearer Than Ever Before


The current contraction in the primary market is just the "deleveraging" after the previous wild growth. When the noise dissipates, the signal becomes clearer than ever before.


For serious investors, this means:


· Due diligence should be like top-tier equity VC, focusing on market size, unit economics, and product moat;


· Post-investment should truly empower, providing customers and channels, not just exchange resources.


Prospect Track: The Next Round of Investment Opportunities in the Crypto Market


The following three directions ArkStream Capital believes have long-term investment potential:


Stablecoins: The Cornerstone of the Next Generation Global Payment and Settlement


The fundamental significance of stablecoins is not just "countercyclical" or "providing cash flow," but to liberate funds from geopolitical, foreign exchange control, and local financial system constraints, enabling capital to have "universality" for the first time. In the past, USD-denominated assets could not freely circulate in many countries, or even be accessed, but stablecoins have changed everything: they act like a "digital artery," injecting global capital into regions and industries that were previously inaccessible.


Cross-border E-commerce & Game Globalization


· Pain Points: Cross-border payments typically take 3–7 days to settle, with fees of 3%–7%, and low credit card penetration leading to payment conversion loss.


· Impact of Stablecoins: Using USDT/USDC for instant settlement, direct global wallet connections, significantly reducing costs and reconciliation efforts.


· Market Size: Cross-border e-commerce>$1 trillion/year (2023), estimated to exceed $3.3 trillion by 2028; global gaming industry $1840 billion (2023) — if only 10% of e-commerce and 5% of gaming adopt stablecoins, the potential annual on-chain transaction volume could reach over $200 billion.


Global Remittances & Remote Payroll


· Pain Points: Traditional remittances average a cost of 6.39% (Q4 2023), slow settlement, restricted channels; LMIC annual remittances $6,560 billion (2023).


· Impact of Stablecoins: 24/7 settlement, traceable on-chain, significantly lower costs than traditional Money Transfer Operators (MTOs), facilitating batch payroll and micro-payment automation.


· Market Size: Global Remittances around $8.6 trillion (2023); if 20% migrates to stablecoins, it would create an additional $1.7 trillion/year of on-chain settlement increment space.


High Inflation/Capital Control Market's Corporate Working Capital


Pain Points: Local currency devaluation and forex quotas squeeze operational cash flow, cross-border raw material procurement and foreign payments are hindered.


Stablecoin Transformation: Leveraging stablecoins for dollarized operational funds, directly connecting with overseas suppliers and contractors, bypassing inefficient/unstable channels.


Market Size: Nigeria recorded $590 billion in crypto transactions from July 2023 to June 2024; in 2024 Q1, nearly $30 billion in small-scale (< $1 million) stablecoin transfers, with stablecoins becoming one of the mainstream use cases.


DeFi-ization of Hedging & Global Derivatives Access


· Pain Points: Small and medium enterprises struggle with low-cost access to forex/interest rate derivatives for hedging, high entry barriers, slow processes.


· Stablecoin Transformation: Using stablecoins as collateral for on-chain lending, forward/option hedging, achieving programmatic, composable risk management and financing.


· Market Size: Global OTC forex market at $75 trillion/day (2022); every 0.5% increase in on-chain penetration ≈ $375 billion/day potential on-chain notional transactions.


RWA: Making Traditional Assets Truly Programmable


Traditional financial assets, despite their enormous scale, have long been constrained by geography, time, and clearing systems: government bonds can only settle on business days, cross-border real estate investment procedures are cumbersome, supply chain invoice approvals are lengthy, private equity fund liquidity is nearly nonexistent. Capital, though massive, has been locked in a "static reservoir."


The value of RWAs lies in: digitizing revenue rights and settlement rights to create cash flows that can automatically circulate and combine on-chain. Government bonds can be used as collateral like stablecoins, real estate rent can be automatically distributed, supply chain financing can be instantly discounted, and private equity fund shares can gain secondary liquidity. For investors, this is not just the digitization of a single asset but a restructuring of global capital efficiency.


Government Bonds / Money Market Funds


· Pain Points: High entry barriers, T+1/2 settlement delaying fund turnover.


· On-chain Transformation: Tokenizing T-Bill/MMF, enabling 24/7 subscription, redemption, and collateralization (BUIDL, BENJI).


· Market Size: US Money Market >$7T; Tokenized US Treasury Bonds only $7.4B (2025-09).


Real Estate and Private Equity Fund


· Pain Points: Poor liquidity, long exit cycles, complex cross-border investments.


· On-Chain Changes: Tokenization of property/fund shares, on-chain distribution of rent and dividends, and introduction of secondary liquidity.


· Market Size: Global real estate $287T, Private Equity Fund AUM $13T+; On-chain total is less than $20B.


Supply Chain Financing and Accounts Receivable


· Pain Points: Difficulty in SME financing, global trade finance gap of $2.5T.


· On-Chain Changes: Accounts receivable tokenization, investors directly connected to cash flow, and redemption executed automatically by contract.


· Market Size: Supply Chain Finance $2.18T; On-chain cumulative financing $10B+.


Commodities and Stocks/ETFs


· Pain Points: Friction in cross-border transfer of gold, ETF share, and restrictions on fractional share trading.


· On-Chain Changes: Tokenization of physical gold, ETF/stock shares, enabling settlement and collateralization.


· Market Size: Gold token market cap ~$2B; On-chain ETF/stock AUM >$100M.


Crypto + AI: Empowering AI with the capabilities of an economic entity


In order for AI to become autonomous, it must be able to spend money, reconcile transactions, and prove delivery on its own. The traditional financial system cannot achieve this: payments rely on manual account opening, cross-border settlements are slow, fees are high, and the results of transactions are difficult to verify. Cryptographic networks provide a complete "operating system":


· Currency Layer: Global 24/7 settlement of stablecoin/deposit token, smart wallets allow the Agent to spend coins automatically, and streaming payments enable "pay-per-call".


· Contract Layer: Funds custody, SLAs, and penalty clauses written into smart contracts, where services not meeting standards are automatically refunded or penalized; policy wallets can set limits, whitelist.


· Verification Layer: TEE and zero-knowledge proofs allow auditability of computing power and reasoning results, and payments are based on "proof" rather than "commitment".


When spendable money and verifiable work are connected on the same chain, an Agent is no longer just an API caller, but operates like an enterprise: buying compute and data with money, exchanging delivery for revenue, accumulating cash flow and credit. This is the true meaning of **"Crypto is the Native Currency of AI"**.


Agent Native Settlement and Treasury


· Pain Points: Fragmentation of API billing and cross-border payments, manual reconciliation/invoicing/risk control, inability to "settle while calling".


· On-chain Changes: Agent holds smart wallet for streaming/micropayments (by token, by millisecond, by request); contract escrows margin and SLA, with automatic refund/forfeiture in case of breach; policy wallet sets daily limits/whitelists/session keys for risk control and permissions.


· Market Size: GenAI total spending ~$202B (estimated for 2028); if 5% settles in real-time through "Agent→on-chain", it forms a $10B/year native payment channel.


Verifiable Compute and Inference Market


· Pain Points: Expensive and post-settlement cloud bills, unverifiable inference results and timestamps, service failures/downtime lack automatic compensation.


· On-chain Changes: Compute providers stake→take orders→provide proof (TEE/zk/multi-party review)→settle based on proof; failure to meet standards results in slashing; price matched by bidding pool, **"payment to proof"** replaces "trust before payment".


· Market Size: AI infrastructure spending ~$223B (estimated for 2028); 5% decentralized/verifiable channels ≈ $11B settlement surface for on-demand compute.


Data Provenance and Licensing


· Pain Points: Unclear sources for training/fine-tuning/inference data, difficult-to-measure authorization, creators and enterprise data struggle to sustainably share revenue.


· On-chain Changes: Data/model/material on-chain licensing and fingerprint tracing; revenue split automatically on each call to addresses (creator, data DAO, annotator, model owner), earnings permanently tied to source.


· Market Size: Data brokerage ~$292B (2025), creator economy ~$480B (2027); enabling 5% to access on-chain licensing and automatic revenue sharing can form a billion-dollar-level continuous distribution channel.


Epilogue


In 2017, Crypto VCs brought "Venture Capital and Token Financing" into the Crypto ecosystem. By 2024, the foundational infrastructure and compliance channels were completed, marking the end of the first curve—creation and circulation of assets and the highway from 0 to 1.


In 2024, we officially entered the Crypto second curve—not to recreate a "hotter narrative," but to see how we can use encryption as a global open, efficient, and verifiable financial highway to support real-world productivity: stablecoins enabling cross-border capital flows, RWAs bringing cash flow assets onto the chain, Crypto + AI enabling direct alignment of funds and delivery. The industry's true value is shifting from valuation narratives to the reconstruction of production relations.


For VCs, the role has not disappeared but shifted towards more practical value creation. Capital needs to move from "chasing hot trends" to "accounting principles," helping entrepreneurs integrate real needs, stable cash flows, and reusable financial primitives onto the chain. Investors who uphold fundamentals and execution will truly capture value in the next decade.


Appendix
For the investment and return data referenced in this article, please see the table below for more details. Feel free to download here.
References
https://cn.rootdata.com/
https://sosovalue.xyz/
https://defillama.com/
https://cryptorank.io/


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