A lively debate has taken place online between several crypto venture capital figures about the future of non-financial use cases in the blockchain universe, notably Web3 projects. The discussion revolves around a central question: have these projects failed due to a lack of real demand and product-market fit, or does their potential still remain untapped?
In brief
- Chris Dixon (a16z Crypto) believes that repeated fraud, regulatory hurdles and risky practices have slowed the adoption of non-financial crypto/Web3 projects.
- Haseeb Qureshi (Dragonfly) counters that their failure is explained by a lack of demand, not by external factors.
- Venture capital invested $34 billion in Web3/crypto startups in 2025, double that of 2024.
Crypto VCs divided on non-financial Web3 projects
On Friday, Chris Dixon (a16z Crypto) kicked off the discussion on These projects, in particular decentralized social networks and other digital services, struggle, according to him, to generate real adoption. Coinbase CEO Brian Armstrong responded directly to support his analysis.
In response, Haseeb Qureshi, managing partner at Dragonfly, defended a much more radical position: according to him, these projects failed because “no one wanted them”. He believes that their lack of success is above all linked to a non-existent demandnot external factors like regulators or controversial figures like Sam Bankman-Fried.
Let's just admit that. They were bad products. They have not passed the market test. It wasn't Gensler, SBF, or Terra who caused these failures – it's just that no one wanted them. To pretend otherwise is to lie to yourself.
Haseeb Qureshi
Nic Carter, founding partner of Castle Island Ventures, supported Qureshi's thesis by calling Dixon's argument misleading. He recalled that the very essence of venture capital is based on an ability to correctly assess market demand within a 2 to 3 year window. Even if Dixon was right in the long run, that doesn't justify past errors in judgment.
Despite these criticisms, investments in Web3 startups surged in 2025reaching $34 billion, up from $17 billion in 2024. This growth was largely driven by large financial institutions, particularly in the area of tokenized real assets (RWA), which alone raised more than $2.5 billion. Each quarter of 2025, crypto funding exceeded $8 billion, a first since 2022. At the end of the year, the total funds raised in venture capital therefore far exceeded the levels observed over the last two years.
Investment direction reveals divergent visions
These disagreements reflect very different investment strategies. a16z Crypto maintains a diverse portfolio, covering both financial use cases (like Coinbase or Uniswap) and Web3 projects focused on gaming, online content or decentralized communities. Dragonfly, conversely, favors purely financial use cases and technical infrastructures linked to value transfer or risk management. Among the projects supported are Agora (stablecoin), Rain (payment platform) and Ethena.
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