Original title: "$650 million, $1.5 billion, $2 billion: The crypto VC landscape has changed!"
Original author: Zhou, ChainCatcher
Many people believe that crypto venture capital is nearing its end.
Over the past decade, crypto VCs have become highly homogenized—crowding into the same sectors, telling the same stories, and vying for the same projects. While seemingly vibrant, the industry is actually fragile at its core.
But what is happening right now is perhaps one of the most anticipated moments in the industry’s history: for the first time, the market has truly begun to differentiate.
In late February 2026, two fundraising announcements emerged one after the other.
On one hand, Dragonfly Capital has completed its fourth fund raising, raising $650 million, with a focus on stablecoins, on-chain financial infrastructure, and tokenization of real-world assets.
On the other hand, Paradigm is seeking up to $1.5 billion in funding for a new fund, expanding its investment scope from crypto to cutting-edge technology fields such as AI and robotics.
Both being top venture capitalists in the crypto industry and both experiencing a downturn, why did they take such different paths?
The situation becomes even more interesting if we include a16z Crypto, which is currently raising $2 billion for its fifth fund.
These three funds represent three completely different answers that crypto VCs are currently giving in the face of industry difficulties.
Guard: The Long-Term Logic of a16z Crypto
In the landscape of crypto VC fundraising, a16z Crypto has long held a top position. This is Andreessen Horowitz's (a16z) dedicated crypto investment fund line, which has completed four rounds of fundraising since 2013, totaling over $7.6 billion, making it one of the world's largest crypto funds in terms of fundraising size.
Earlier this year, a16z completed a new round of fundraising of $15 billion, spanning multiple areas including infrastructure, application layer and growth fund, and listed the intersection of AI and encryption as one of its important investment directions.
According to Fortune magazine, a16z Crypto is raising its fifth fund, with a target of approximately $2 billion, and plans to complete the fundraising by the end of the first half of 2026.
Chris Dixon, a partner at a16z Crypto, sees blockchain as the next infrastructure for the internet, believing that the crypto industry is in a long "foundational period," much like the neural network paper published in 1943 for AI today, and that true mainstream adoption will require decades of groundwork.
Dixon has publicly stated that a16z Crypto's current holdings represent 95% of its historical investments, because in venture capital, selling quality assets too early is the worst decision.
The team's annual crypto industry report sends a consistent signal to investors: even in a downturn, we remain committed to understanding what's happening in the industry.
a16z Crypto targets investors who are long-term institutional investors in the crypto industry's fundraising landscape and are old money with a deep belief in the industry.
For them, as long as they still believe in the future of crypto, a16z Crypto is a natural choice.
Transformation: The Financial Evolution of Dragonfly
Founded in 2018, Dragonfly started as an early-stage crypto VC connecting the Asian and American markets. Its first fund was only $100 million, and its core competitive advantage at the time was the co-founders' ability to leverage geographical arbitrage between the two markets.
Since 2019, Dragonfly has gradually expanded into the secondary market, managing liquidity and building its own trading team. It not only serves as a risk hedging tool but also provides real-time market data for primary market investments, offering a supplementary perspective for project evaluation.
In 2022, Dragonfly acquired Metastable, a crypto hedge fund co-founded by Naval Ravikant in 2014, bringing it under its wing and thus forming three parallel business lines: Dragonfly Ventures (primary investment), Dragonfly Liquid (liquidity strategy), and Metastable (hedge fund).
The core difference between Dragonfly and pure primary crypto funds lies in the combination of the judgment of a primary VC and the trading capabilities of the secondary market.
However, establishing this system is not something that can be done overnight. Building an investment system that spans primary and secondary markets means simultaneously constructing two completely different decision-making frameworks, risk control systems, and talent structures—primary markets require in-depth technical judgment on early-stage projects, while secondary markets require precise quantitative capabilities in understanding the microstructure of the market.
Dragonfly's previous job postings explicitly required candidates to have expertise in delta-neutral hedging and derivatives inventory risk management. Such talent is scarce in the crypto industry, and bringing in such individuals from traditional financial institutions would require a long adaptation period.
This trading system is a barrier that Dragonfly has built up over many years, and it is also the part that is most difficult for other funds to directly replicate.
Today, Dragonfly is a transaction-driven firm spanning both primary and secondary markets, with total assets under management of approximately $4 billion and a portfolio that includes unicorns such as Ethena, Polymarket, and Monad Labs.
However, behind this lies a less than optimistic industry trend.
According to RootData, the primary market for cryptocurrencies raised $22.73 billion in 2025 (excluding post-IPO and debt financing), a 120.6% increase compared to 2024. However, in terms of the number of financing events, there were only 933 events throughout the year, a 40.3% decrease compared to the previous year, marking a five-year low. The number of monthly financing events also showed an almost unilateral downward trend.
The total amount of financing is increasing, but the number of projects receiving financing is decreasing, which means that money is becoming more concentrated, leaving less and less room for small and medium-sized early-stage projects.
Haseeb Qureshi, Managing Partner of Dragonfly, believes that past experiments with generic crypto applications and non-financial attributes have been proven false by the market. The new fund will focus its bets on stablecoins, DeFi, and on-chain financial services.
He stated that the growth of recent investments in Ethena, Polymarket, Rain, and Mesh speaks volumes: "The reach of crypto is about to explode, and we want to support the founders at the heart of it."
Dragonfly targets investors who believe in the financialization of blockchain, transaction-driven allocators, and investors with a pragmatic attitude towards crypto.
They may not need grand narratives about crypto changing the world; real liquidity and sustainable trading returns are the answers they need.
The key to Dragonfly's path is to go with the flow . The crypto industry is becoming increasingly financialized, and Dragonfly simply turned this trend into its core competitiveness earlier than others.
Breaking: Paradigm's Boundary Narrative
The story of Paradigm begins with the changes in a set of numbers.
In 2021, Paradigm raised $2.5 billion, setting a record for the largest single fundraising in the history of crypto funds at the time.
In 2024, the third fund shrank to $850 million.
This time, the target is $1.5 billion, with investments expanding from crypto to AI, robotics, and other cutting-edge technologies.
Paradigm's background is rooted in venture capital and incubation. Co-founder Matt Huang comes from Sequoia Capital and founded a machine learning startup at the age of 19, which was acquired by Twitter. Another co-founder, Fred Ehrsam, was a co-founder of Coinbase.
The team’s strength lies in early trend judgment and control of technical risks. Matt Huang’s collaborator, Stripe founder Patrick Collison, once commented on him: “He is calm, meticulous, and patient—qualities that are particularly well-suited for complex technologies with delayed impact.”
Paradigm's portfolio includes early protocols such as Uniswap and Coinbase, which laid the foundation for its industry position.
Paradigm has therefore been described by outsiders as "more like a combination of a research laboratory and an engineering organization than a traditional venture capital firm".
After FTX collapsed, Paradigm spent three years rebuilding. However, the current lack of high-quality early-stage investments in the crypto industry has not been fundamentally improved. For a fund that emphasizes judgment and incubation capabilities, the lack of good projects to invest in is a more fundamental predicament than the decline in market value.
Therefore, Paradigm's shift towards AI was by no means a spur-of-the-moment decision.
In fact, as early as 2023, Paradigm quietly removed Web3-related statements from its official website. Matt Huang later explained that "the progress of AI is too interesting to ignore," and stated that cryptography and AI are not a zero-sum competition, but will have a lot of overlap. Earlier this year, Paradigm and OpenAI jointly released EVMbench, a benchmark tool for testing whether AI models can identify and patch smart contract vulnerabilities.
According to OECD data, global VC investment in AI will reach $258.7 billion in 2025, accounting for 61% of total global VC investment, compared to only 30% in 2022.
However, looking at it from a more realistic perspective, Paradigm's shift towards AI has more structural reasons.
In the entire crypto VC fundraising landscape, a16z Crypto firmly holds the top-tier long-term funding, while Dragonfly is the most capable hunter in the financialization sector.
Paradigm's team DNA is neither suited to replicating a16z Crypto's long-term belief narrative nor to following Dragonfly's transaction-driven approach.
Its team's DNA dictates that it can only tell a narrative of integration and innovation in order to attract new funds that no longer value pure encryption but are still willing to bet on cross-industry technological integration.
This is the underlying motivation for Paradigm's current shift, and also its only area for deviation.
Alexander Pack, managing partner at Hack VC (formerly managing partner of Dragonfly), stated that KKR and Bain Capital have both shifted from pure private equity investing to credit and public equities, and a16z has also established funds targeting various segments of the technology sector. Paradigm's move, like the trend across the industry, signifies that the company is maturing and reintegrating into the broader technology landscape.
Three paradigms, three types of betting
Putting the three funds together reveals a clear logical divergence.
They are all answering the same question: In the midst of a crypto industry downturn, what gives you the right to continue existing as a fund?
a16z Crypto's answer is scale and conviction. Large enough to weather cycles, research deep enough to represent the industry, and consistently conveying confidence to the market.
Dragonfly's answer is capability and focus. They delve deeply into the financialization of crypto, using trading capabilities to compensate for the limitations of the primary market, and maintaining the activity of funds during periods of project scarcity.
Paradigm's answer lies in narrative and breaking out of its comfort zone. By using a new story of the convergence of AI and encryption, it aims to attract investors that traditional crypto VCs cannot reach, expanding its boundaries from one industry to the broader wave of technological convergence.
Three funds, three different responses. No single paradigm is the final solution, nor can any paradigm be easily replicated—ultimately, the stories that can be told are determined by the team's DNA.
This may be a sign that crypto VCs are maturing, no longer a sea of competitors vying for the same path, but rather each finding its own way. A homogenized industry is fragile; only when diverse species emerge can the market truly thrive.
