VC investment style shifts: public blockchains and AI lose momentum; prediction and payments take the lead.

Original article | Odaily Planet Daily ( @OdailyChina )

Author｜jk

The cryptocurrency venture capital market is undergoing a quiet transformation. In DefiLlama's latest funding data, among the 73 projects that completed funding rounds exceeding $10 million in the past three months, almost none are Layer 1 or Layer 2 public chains. The public chain sector, once considered the "holy grail," has virtually disappeared. Meanwhile, prediction markets, payment systems, RWA (Real-World Assets), and infrastructure for ordinary users are attracting a massive influx of capital.

The L1 and L2 fervor has subsided, and large-scale AI funding has almost dried up.

Looking back at the peak of the 2021-2022 bull market, new public chains such as Solana, Avalanche, and Fantom raised hundreds of millions of dollars in funding, with investors scrambling to bet on "Ethereum killers." However, three years later, the market landscape has undergone a fundamental transformation.

After Movement and Story, and this year's Berachain and Monad, large-scale financing for public blockchains is no longer as prevalent.

According to data from The Block, the total funding for blockchain networks (including L1 and L2) in 2024 was approximately $1.8 billion. While still an important sector, the growth rate has slowed significantly. Furthermore, according to statistics from user @pgreyy on X, in Q4 of 2025, apart from Tempo (a new public chain supported by Paradigm that focuses solely on payments), no new L1 or L2 blockchain will receive more than $10 million in investment.

Can a public blockchain without 10 million in investment still live up to its role as a "world computer" and "Ethereum killer"?

Investors have realized that the market doesn't need more "high-performance public chains," but rather applications that can generate real users and real revenue. Crypto influencer @sjdedic stated his conclusion on X: "Nobody cares about infrastructure anymore. The spotlight has shifted to the application layer—consumer-end products and real-world use cases. Those L1 tokens still stuck in the 'medium IQ trap,' focusing solely on technology while ignoring everything else, are in trouble." He further predicted: "I wouldn't be surprised to see applications valued at tens of billions of dollars emerge in the next few years, while L1 tokens gradually lose market share and slowly become insignificant."

Similarly, despite AI being the hottest tech concept in 2025, only two crypto projects that raised over $10 million in the past three months belong to the AI sector : Inference raised $11.8 million in a seed round, and TAO Synergies Inc. completed an $11 million private equity funding round, totaling just $22.8 million. Even removing the $10 million limit, there are only nine such projects. This number is negligible compared to Web2. In contrast, a mid-sized payment company, Coinflow, raised $25 million in a single funding round.

Who could have imagined that just one year later, not only would the spectacular battle between Virtuals and ai16z become a thing of the past, but the entire AI x Web3 race would also lose its luster.

Emerging Tracks

Prediction Markets: From the Margins to the Mainstream

Prediction markets were undoubtedly the brightest dark horse of 2025 and the most eye-catching sector in this round of financing data. Polymarket and Kalshi alone attracted over $3.15 billion in funding , dominating the entire list. Polymarket generated over $3.3 billion in trading volume during the 2024 US election, and its accuracy in predicting election results even surpassed that of traditional polling agencies. In October 2025, the Intercontinental Exchange (ICE)—the parent company of the New York Stock Exchange—announced an investment of up to $2 billion in Polymarket, pushing its valuation to $8-9 billion. Polymarket had also previously completed a $150 million funding round.

At the same time, Kalshi not only completed a $1 billion Series E funding round, but also secured $300 million in Series D funding for its DeFi business, with investors including top institutions such as Sequoia, a16z, and Paradigm.

Payments and Banking: The "Supercycle" of Stablecoins

Who exactly has taken over the public blockchain funding frenzy? The answer is undoubtedly the payment/banking sector.

Looking at financing data, the payment sector has raised nearly $1.3 billion in total, covering the entire ecosystem from underlying infrastructure to consumer applications. In 2025, the circulating supply of stablecoins increased by approximately $30 billion from the beginning of the year, with monthly transaction volume exceeding $1 trillion, comparable to Visa's transaction volume.

Ripple Labs secured $500 million in strategic investment, and Rapyd completed a $500 million Series F funding round, bringing the total funding raised by the two companies to $1 billion, giving them a dominant position in the payments sector. While these giants continue to lead the pack, the new digital banking, interbank B2B services, and financial services sectors are also active. Singapore's Pave Bank, France's Deblock, Switzerland's Future Holdings, and the Netherlands' Amdax have all raised over $20 million.

It's hard to imagine that in 2019, VC investment in the stablecoin sector alone was less than $50 million.

RWA: Connecting the Virtual and Real Worlds

Real-world asset tokenization (RWA) is moving from the experimental stage to large-scale application. Looking at funding data, Figure leads the sector with its $787.5 million IPO, and with an additional $25 million in funding, this single company contributed over 95% of the total funding in the RWA sector. RWA-compliant company Satschel raised $15 million in equity funding, and on-chain stock trading infrastructure company Block Street completed an $11.5 million funding round, bringing the total funding in the RWA sector to over $850 million.

According to data from RWA.xyz, on-chain tokenized assets have exceeded $36 billion, of which the market value of tokenized gold is projected to grow from $1 billion to over $3.27 billion in 2025, an increase of 227%.

Meanwhile, traditional asset management giants such as BlackRock, Apollo, and Franklin Templeton are actively tokenizing their institutional-grade products. Private equity managers are beginning to use blockchain to represent ownership of traditional assets, enabling fragmented holding and instant settlement.

Meanwhile, another key focus for VCs is infrastructure projects that can reach ordinary users. These projects are characterized by lowering the barriers to cryptocurrency use, allowing non-crypto native users to easily access blockchain services. Wallet abstraction, social login, and fiat currency deposits and withdrawals are all attracting investment. U-card RedotPay secured $47 million in strategic funding, investment firm Finary completed a $29.4 million Series A round, and custodian Bron raised $15 million in seed funding. These projects are lowering the barriers to cryptocurrency use for users, paving the way for the next wave of user growth.

DeFi: Steady Recovery

DeFi performed steadily in this funding round, raising approximately $740 million in total. However, compared to prediction markets and payments, the size of individual funding rounds was significantly smaller. Decentralized trading platform Flying Tulip became the top-funded pure DeFi project with a $200 million seed round, followed by Lighter with $68 million and Jito with $50 million in strategic investment. Funding data for 2025 reflects a more cautious valuation attitude from VCs towards the DeFi sector. According to data from The Block, over 530 funding rounds were completed in DeFi in 2024, a figure clearly not reached in 2025.