Is finance crypto’s first chapter or its final form? VCs weigh in…

Has the future of cryptocurrency in finance been firmly established, or is the potential for non-financial applications only beginning to unfold?

Chris Dixon, Managing Partner at a16z Crypto, rejected the narrative, stating,

He explained that blockchains introduced a coordination primitive, with finance emerging first because infrastructure had to develop before other sectors.

Haseeb Qureshi, Managing Partner at Dragonfly, responded directly by challenging the idea that regulation was to blame. He asked why finance thrived despite facing even stricter scrutiny.

In his view, consumer crypto failed because of weak demand rather than policy barriers, arguing that the products themselves were poor and ultimately failed the market test.

Dixon pointed to internet-era sequencing and supportive policy shifts, while Qureshi cites adoption history, concluding finance remains crypto’s only proven product-market fit.

Capital flows reveal crypto’s true product-market fit

Venture funding rose sharply in 2025, surpassing $20 billion, the highest level since 2022 and more than double 2023 totals. Growth accelerated into Q4, where $8.5 billion flowed across 425 deals, up 84% quarter over quarter.

Capital focused on later-stage rounds, infrastructure, and DeFi, signaling institutional conviction rather than retail hype. This expansion aligned with DeFi’s stabilization phase.

Total value locked recovered to about $99.07 billion, rebounding from the $50 billion bear-market floor, while stablecoin supply exceeded $307 billion.

Lending platforms such as Morpho maintained deep liquidity, reinforcing finance as crypto’s product-market fit layer. Meanwhile, stablecoin settlement reached trillions annually, with adjusted volumes rivaling traditional rails in throughput.

Together, funding inflows and payment growth supported finance-led adoption, validating Haseeb’s demand view while still reflecting Dixon’s sequencing logic.

Revenue density is still anchored

Earnings concentration across top protocols reinforces the value-accrual divide.

Financial platforms led profitability through the year, with PancakeSwap [CAKE] generating about $15.8 million in 30-day earnings and Aave [AAVE] $10.4 million, signaling fee-driven sustainability.

As emissions declined, retained value strengthened through burns and staking, which supported net profitability. In contrast, non-financial sectors relied heavily on token rewards to drive usage. Gaming and social activity spiked during airdrops and play-to-earn phases; however, retention weakened once subsidies faded.

Revenue density remained thin, with top blockchain games producing roughly $4.2 million daily and ARPU often below $10–$30. Thus, the utility attracted users but struggled to convert engagement into a durable cash flow.

All this together, from a revenue and venture‑returns perspective, Haseeb’s demand argument appears stronger, while Dixon’s view remains structurally long‑term.

Final Thoughts

• Finance remains crypto’s dominant value-accrual layer, with capital, revenue, and payment flows consolidating around DeFi and stablecoin rails.
• Utility sectors drive engagement but fail to convert usage into durable cash flow, reinforcing venture skepticism despite long-term expansion potential.