VC investment trends shift: Public chains and AI cool down; predictions and payments take the lead

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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 presence of Layer 1 and Layer 2 public chains. The once-celebrated “Holy Grail” public chain track has nearly disappeared. Meanwhile, prediction markets, payment systems, RWA (Real World Assets), and infrastructure aimed at ordinary users are attracting significant capital inflows.

L1, L2 Hot Trend Fades, AI Large-Scale Funding Also Nearly Fizzles Out

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

From Movement, Story, to this year’s Berachain and Monad, large-scale funding for public chains has lost its former glory.

According to data from The Block, the total blockchain network (including L1 and L2) funding in 2024 is approximately $1.8 billion. While still an important track, the growth rate has significantly slowed. Additionally, based on user @pgreyy’s statistics on X, in Q4 2025, apart from Tempo supported by Paradigm (a new public chain focused solely on payments), no new L1 or L2 has received over $10 million in investment.

Can public chains without $10 million in funding still maintain their position as a “world computer” or “Ethereum killer”?

Investors have realized that the market doesn’t need more “high-performance public chains,” but applications that 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 products and real use cases. Those still stuck in the ‘average IQ trap,’ focusing only on technology and ignoring everything else, are in trouble.” He further predicted: “I wouldn’t be surprised if, in the next few years, applications with valuations in the hundreds of billions of dollars emerge, while L1 tokens gradually lose market share and become irrelevant.”

Similarly, although AI is the hottest tech concept in 2025, among the crypto projects that raised over $10 million in the past three months, only two belong to the AI track: Inference raised $11.8 million in seed funding, and TAO Synergies Inc completed $11 million in private equity funding, totaling only $22.8 million. Even if we remove the $10 million limit, only nine projects remain. This number is just a drop in the bucket compared to Web2. For comparison, a mid-sized payment company Coinflow alone raised $25 million in a single round.

Who would have thought that just a year later, not only has the Virtuals battle with ai16z become a thing of the past, but the entire AI x Web3 track is no longer hot.

Emerging Tracks Rise

Prediction Markets: From Marginal to Mainstream

Prediction markets are undoubtedly the brightest dark horse of 2025 and the most impressive track in this round of funding data. Just Polymarket and Kalshi attracted over $3.15 billion, dominating the entire list. Polymarket generated over $3.3 billion in trading volume during the 2024 US election, with prediction accuracy 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, boosting 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 DeFi operations, with top investors including Sequoia, a16z, and Paradigm.

Payments and Banking: The “Super Cycle” of Stablecoins

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

From the funding data, the payments sector has accumulated nearly $1.3 billion, covering a complete ecosystem from underlying infrastructure to consumer applications. In 2025, the circulation of stablecoins grew by about $30 billion from the beginning of the year, with monthly transaction volumes exceeding $1 trillion, comparable to Visa’s transaction scale.

Ripple Labs received a strategic investment of $500 million, and Rapyd completed a $500 million Series F funding round. Together, these two companies account for over half of the payments track. While industry giants continue to lead, new digital banks, interbank B2B services, and financial service tracks are also active. Singapore-based Pave Bank, France’s digital bank Deblock, Swiss company Future Holdings, and Dutch firm Amdax all raised over $20 million.

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

RWA: Connecting Virtual and Real

Tokenization of Real World Assets (RWA) is moving from experimental to large-scale application. Based on funding data, Figure leads the entire RWA track with an IPO scale of $787.5 million, plus an additional $25 million in funding, making one company responsible for over 95% of RWA funding. RWA compliance company Satschel received $15 million in equity financing, and on-chain stock trading infrastructure company Block Street completed $11.5 million in funding. The total RWA funding exceeds $850 million.

According to RWA.xyz, on-chain tokenized assets have surpassed $36 billion, with tokenized gold’s market cap growing from $1 billion in 2025 to over $3.27 billion, a 227% increase.

Meanwhile, traditional asset giants like BlackRock, Apollo, and Franklin D. Dutton are actively tokenizing institutional-grade products. Private equity fund managers are beginning to use blockchain to represent ownership of traditional assets, enabling fractional ownership and instant settlement.

Another focus for VC is infrastructure projects that can reach ordinary users. These projects aim to lower the barriers to using cryptocurrencies, making blockchain services accessible to non-native crypto users. Wallet abstraction, social login, fiat on/off ramps, and other directions are attracting investment. U Card RedotPay received $47 million in strategic investment, Finary completed a $29.4 million Series A, and self-custody firm Bron secured $15 million in seed funding. These projects are lowering the entry barriers for users and paving the way for the next wave of user growth.

DeFi: Steady Recovery

DeFi performed steadily in this funding round, with a total of about $740 million raised. However, compared to prediction markets and payment tracks, individual funding rounds are significantly smaller. Decentralized exchange Flying Tulip raised $200 million in seed funding, making it the top DeFi project in terms of funding. Lighter secured $68 million, and Jito received $50 million in strategic investment. The 2025 funding data reflects more cautious VC valuation attitudes toward DeFi. According to The Block, DeFi completed over 530 funding rounds in 2024, but 2025 clearly did not reach that scale.