Original | Odaily Planet Daily (@OdailyChina)
Author｜jk
The cryptocurrency venture capital market is undergoing a quiet transformation. According to the latest funding data from DefiLlama, among the 73 projects that completed over $10 million in funding in the past three months, there is almost no sign of Layer 1 and Layer 2 public chains. The public chain track, once regarded as the "holy grail," 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 L1 and L2 boom has ended, and large AI financing has also nearly extinguished.
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-scale financing for public chains is no longer thriving.
According to data from The Block, the total funding for blockchain networks (including L1 and L2) in 2024 is approximately $1.8 billion. While it remains an important track, the growth rate has clearly slowed. According to user @pgreyy on X, in Q4 2025, aside from Tempo (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 maintain 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 of 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 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.
Emerging Tracks Rise
Prediction Markets: From Marginal to Mainstream
Prediction markets are undoubtedly the most dazzling dark horse of 2025 and the standout track in this round of funding 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 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 funding round earlier.
Meanwhile, Kalshi not only completed a $1 billion Series E funding but also secured $300 million in Series D funding for its DeFi business, with top institutions like Sequoia, a16z, and Paradigm among the 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 funding data, the payments track has accumulated nearly $1.3 billion in funding, covering a complete ecosystem from underlying infrastructure to consumer-level applications. In 2025, the circulation of stablecoins grew by about $30 billion since the beginning of the year, with monthly transaction 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 funding, with the two companies together accounting for a significant portion of the payments 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 digital bank Deblock, Switzerland's Future Holdings, and the Netherlands' Amdax have all secured over $20 million in funding.
It's hard to imagine that in 2019, VC investment in the stablecoin sector was less than $50 million.
RWA: Bridging the Virtual and the Real
The tokenization of real-world assets (RWA) is moving from the experimental stage to large-scale application. From the funding data, Figure leads the entire track with an IPO scale of $787.5 million, along with an additional $25 million in funding, contributing over 95% of the total funding 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 funding, bringing the total funding in 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 fragmented 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 easily 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 performed steadily in this round of funding, accumulating approximately $740 million, but the scale of individual financing is significantly smaller compared to the prediction markets and payments tracks. 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 funding 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 funding rounds in 2024, and it is clear that 2025 has not reached this scale.
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