VC investment style shifts: public chains and AI cool down; predictions and payments take the lead

Dec 28, 2025 12:13:17

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Author: jk, Odaily Planet Daily

The cryptocurrency venture capital market is undergoing a quiet transformation. According to the latest financing data from DefiLlama, among the 73 projects that completed over $10 million in financing in the past three months, there is almost no sign of Layer 1 and Layer 2 public chains. What was once regarded as the "Holy Grail" of public chain tracks has nearly disappeared. Meanwhile, prediction markets, payment systems, RWA (real-world assets), and infrastructure aimed at ordinary users are attracting a significant influx of capital.

The End of the L1 and L2 Boom, AI Large Financing Also Nearing Extinction

Looking back at the peak of the bull market in 2021-2022, new public chains like Solana, Avalanche, and Fantom easily raised hundreds of millions of dollars, with investors scrambling to bet on "Ethereum killers." However, three years later, the market landscape has fundamentally changed.

From Movement and Story to this year's Berachain and Monad, large financing for public chains has lost its former glory.

According to data from The Block, the total financing amount for blockchain networks (including L1 and L2) in 2024 is approximately $1.8 billion. Although it remains an important track, the growth rate has clearly slowed. According to user @pgreyy on X, in Q4 2025, apart from Tempo (also a new public chain focused solely on payments, supported by Paradigm), no new L1 or L2 has been able to secure over $10 million in investment.

Can public chains without $10 million in investment still hold a position as a "world computer" or "Ethereum killer"?

Investors have realized that the market does not need more "high-performance public chains," but rather applications that can bring real users and real revenue. Crypto influencer @sjdedic stated on X, "No one cares about infrastructure anymore. The spotlight has shifted to the application layer—consumer-facing products and real use cases. Those L1s still stuck in the 'medium IQ trap,' focusing solely on technology while neglecting everything else, are in trouble." He further predicted, "I wouldn't be surprised to see applications with valuations in the hundreds of billions of dollars in the coming years, while L1 tokens gradually lose market share and become irrelevant."

Similarly, although AI is the hottest tech concept in 2025, only two crypto projects in the past three months that raised over $10 million belong to the AI track: Inference secured $11.8 million in seed funding, and TAO Synergies Inc completed $11 million in private equity financing, totaling only $22.8 million. Even without the $10 million threshold, there are only 9 projects. This number is just a drop in the bucket compared to Web2. In contrast, a mid-sized payment company, Coinflow, raised $25 million in a single financing round.

Who would have thought that just a year later, not only has the spectacle of Virtuals battling ai16z become a thing of the past, but the entire AI x Web3 track has also cooled down.

The Rise of Emerging Tracks

Prediction Markets: From Marginal to Mainstream

Prediction markets are undoubtedly the most dazzling dark horse of 2025 and the brightest track in this round of financing data. Just Polymarket and Kalshi alone have attracted over $3.15 billion in funding, dominating the entire list. Polymarket generated over $3.3 billion in trading volume during the 2024 U.S. elections, with its accuracy in predicting election outcomes even surpassing that of traditional polling agencies. In October 2025, Intercontinental Exchange (ICE)—the parent company of the New York Stock Exchange—announced an investment of up to $2 billion in Polymarket, raising its valuation to $8-9 billion. Polymarket also completed a $150 million financing round earlier.

Meanwhile, Kalshi not only completed a $1 billion Series E financing but also secured $300 million in Series D financing for its DeFi business, with top institutions like Sequoia, a16z, and Paradigm as investors.

Payments and Banking: The "Super Cycle" of Stablecoins

Who has taken over the heat of public chain financing? The answer is undoubtedly the payments/banking track.

From the financing data, the payment track has accumulated nearly $1.3 billion in financing, covering a complete ecosystem from underlying infrastructure to consumer applications. In 2025, the circulation of stablecoins increased by about $30 billion since the beginning of the year, with monthly trading volumes exceeding $1 trillion, now comparable to Visa's transaction scale.

Ripple Labs secured $500 million in strategic investment, and Rapyd completed $500 million in Series F financing, with the two companies together accounting for a significant portion of the payment track. While major players continue to lead, new digital banks, interbank B2B services, and financial services tracks are also active. Singapore's Pave Bank, France's Deblock, Switzerland's Future Holdings, and the Netherlands' Amdax have all secured over $20 million in financing.

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

RWA: Connecting the Virtual and the Real

The tokenization of real-world assets (RWA) is moving from the experimental stage to large-scale application. From the financing data, Figure leads the entire track with an IPO scale of $787.5 million, and with an additional $25 million in financing, this one company contributes over 95% of the financing amount in the RWA track. RWA compliance company Satschel secured $15 million in equity financing, and on-chain stock trading infrastructure company Block Street completed $11.5 million in financing, bringing the total financing for the RWA track to over $850 million.

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

At the same time, traditional asset management giants like BlackRock, Apollo, and Franklin Templeton are actively tokenizing institutional-grade products. Private fund managers are beginning to use blockchain to represent ownership of traditional assets, enabling fractional ownership and instant settlement.

Additionally, another focus for VCs is infrastructure projects that can reach ordinary users. These projects are characterized by lowering the barriers to using cryptocurrencies, allowing non-crypto native users to conveniently access blockchain services. Wallet abstraction, social login, and fiat on/off ramps are all attracting investment. U Card RedotPay secured $47 million in strategic investment, investment company Finary completed $29.4 million in Series A, and self-custody company Bron raised $15 million in seed funding. These projects are lowering the barriers for users to use cryptocurrencies, paving the way for the next wave of user growth.

DeFi: Steady Recovery

DeFi has performed steadily in this round of financing, accumulating approximately $740 million, but compared to prediction markets and payment tracks, the scale of individual financing rounds is significantly smaller. Decentralized trading platform Flying Tulip became the financing champion among pure DeFi projects with a $200 million seed round, Lighter secured $68 million, and Jito received $50 million in strategic investment. The financing data for 2025 reflects a more cautious valuation attitude from VCs towards the DeFi track. According to The Block, the DeFi track completed over 530 financing rounds in 2024, which has clearly not been reached in 2025.