Author: Zhou, ChainCatcher Over the past year, beneath the surface of the volatile crypto market and rapidly changing narratives, only a handful of projects have truly proven their value. However, when we put together the names of some of the most talked-about projects recently, whether it's the high-performance public chains MegaETH and Monad, the popular stable-yield protocol Ethena, or the prediction market pioneer Polymarket, Dragonfly is almost always present in their early or key investment lists. As one seasoned investor in the industry put it, Dragonfly is the biggest winner in this cycle. Dragonfly's Investment Profile and Background: Driven by Trading Instinct Dragonfly is a venture capital fund focused on the crypto space, founded by Feng Bo. As an early investor, Feng Bo possesses a deep understanding of exchange operations, liquidity needs, and trading scenarios, giving Dragonfly a financial perspective from the outset. He has repeatedly stated that blockchain should not be simply understood as "a faster internet," but rather as a set of tools for rebuilding the financial stack. Haseeb Qureshi, Managing Partner of Dragonfly, has repeatedly emphasized the issue of navigating economic cycles. He believes the real challenge lies not in the rotation of sectors or narratives, but in the systemic pain points that recur throughout bull and bear markets: How can performance bottlenecks be overcome? Can on-chain clearing mechanisms withstand extreme pressure? Is the revenue structure sustainable in the long term? How can data be transformed into tradable financial assets? In the absence of systemic risk hedging, how can institutional funds safely enter the market? These issues are easily obscured by the frenzied narrative of a bull market, and only come to the forefront again when the market cools down. In his recent article, "In Defense of Exponential Growth," Haseeb Qureshi points out that the market often misjudges the value of Ethereum, Solana, and next-generation L1 blockchains (such as Monad and MegaETH) because it falls into the "error of linear thinking": it uses traditional models such as P/E ratios and revenue metrics to judge blockchains, and treats companies with exponential growth as steady-state businesses. He firmly believes that the pricing logic of L1 projects is similar to that of biotechnology: a mere 1% to 5% probability of becoming the next Ethereum or Solana is enough to rationally justify their multi-billion dollar valuation (i.e., the "probability premium"). Therefore, long-term conviction is the real advantage in crypto investing that is often forgotten by most. Looking back at Dragonfly's investment portfolio over the past three years, a complete chain from underlying infrastructure to upper-layer applications can be clearly outlined: Public blockchains and scaling: Monad (seed round 2023), MegaETH (2024), Prodia (2024), Caldera (2023), etc.; Trading infrastructure: Lighter (2024), Level (2024), Orderly (2023 expansion), Bitget (2023 strategic round), etc.; Stable assets and returns: Ethena (multiple rounds in 2023-2024), Pendle (2023), etc.; Data and tools: Kaito (Series A, 2023), Polymarket (Two rounds, 2024-2025), etc. This is not a strategy of casting a wide net, but a clear preference: prioritize betting on long-term gaps in key links, and then look for key pieces of the puzzle in each link. This deep understanding is directly reflected in Dragonfly's investment preferences. They seem to rarely pursue whether a project can achieve several times growth in the short term, but rather care more about whether the mechanism or product can still be valued by the industry five or even ten years later. Core Differentiated Advantages and Challenges The underlying logic of Dragonfly's success lies in two mutually supportive differentiated pillars. First, Dragonfly boasts a strong secondary market trading team, a fundamental difference from many purely primary market VCs. This strategic move, established as early as 2019, manages over $1 billion in liquidity, creating a strong competitive advantage for its investment decisions. The L2 team can capture real market sentiment, fund flows, and narrative shifts much earlier. Their sensitivity to indicators such as liquidity and liquidation pressure far surpasses that of traditional primary VCs, allowing them to feed real-world data into primary market decisions. Haseeb Qureshi has publicly stated that the secondary market is not an exit strategy, but rather an outpost for investment. Secondly, Dragonfly's investment in multiple trading platforms such as Bitget and Bybit aims not only to increase the equity value of the exchanges themselves, but also to transform them into distribution amplifiers and liquidity channels for stable assets. Dragonfly has successfully integrated its supported stable assets (such as Ethena's USDe) into the exchange system through strategic deployment on trading platforms. Once stable assets can be used as collateral or the underlying assets of trading pairs on exchanges, it will greatly stimulate user demand and purchases, thereby rapidly expanding the issuance scale of stablecoins. Admittedly, the best time to evaluate a VC isn't during a bull market, but rather when everyone is less inclined to invest. The primary crypto market has cooled significantly over the past year. According to RootData statistics, there have been 1058 funding events recorded so far in 2025, a 46% decrease from the peak of 1962 in 2022. In this waning sentiment, most funds have proactively slowed down, with some capital simply shifting towards AI or traditional technologies. Against this backdrop, competition for high-quality projects has intensified. Dragonfly not only needs to compete with well-funded established VCs like Paradigm for early-stage star projects, but also faces the impact on liquidity from the entry of traditional financial investment giants. In addition, leading exchanges are also deploying their investment and incubation departments to develop vertical sectors. This poses a severe challenge to Dragonfly's project acquisition, ecosystem control, and long-term holding capabilities. Furthermore, as cutting-edge technologies such as AI become deeply integrated with encryption, a key challenge for investment institutions like Dragonfly, with a pure encryption background, is whether their expertise will be recognized by the founders when acquiring high-quality cross-industry projects. Conclusion ChainCatcher previously interviewed several early Crypto investors, mentioning in their article "The New Cycle and Old Rules of Crypto VCs" that many native crypto VCs, indulging in narrative-driven and short-term speculation, face a mismatch between value capture and risk-taking. Dragonfly's demonstrated trading instincts, secondary market hedging capabilities, and emphasis on stablecoin cash flow precisely return to the old rules of long-term USD funds: meticulous management of systemic risk and the search for sustainable revenue models with endogenous growth momentum. From this perspective, Dragonfly's emergence as a winner in this cycle is a microcosm of fund managers returning to traditional rules in the new crypto cycle. However, facing competition from traditional giants, traditional financial investment giants, and leading exchanges, as well as the professional challenges brought about by the integration of crypto and cutting-edge technologies, Dragonfly must consider how to extend this trading instinct to cross-domain technological infrastructure to maintain its long-term competitive advantage if it wants to break through its existing growth boundaries.Author: Zhou, ChainCatcher Over the past year, beneath the surface of the volatile crypto market and rapidly changing narratives, only a handful of projects have truly proven their value. However, when we put together the names of some of the most talked-about projects recently, whether it's the high-performance public chains MegaETH and Monad, the popular stable-yield protocol Ethena, or the prediction market pioneer Polymarket, Dragonfly is almost always present in their early or key investment lists. As one seasoned investor in the industry put it, Dragonfly is the biggest winner in this cycle. Dragonfly's Investment Profile and Background: Driven by Trading Instinct Dragonfly is a venture capital fund focused on the crypto space, founded by Feng Bo. As an early investor, Feng Bo possesses a deep understanding of exchange operations, liquidity needs, and trading scenarios, giving Dragonfly a financial perspective from the outset. He has repeatedly stated that blockchain should not be simply understood as "a faster internet," but rather as a set of tools for rebuilding the financial stack. Haseeb Qureshi, Managing Partner of Dragonfly, has repeatedly emphasized the issue of navigating economic cycles. He believes the real challenge lies not in the rotation of sectors or narratives, but in the systemic pain points that recur throughout bull and bear markets: How can performance bottlenecks be overcome? Can on-chain clearing mechanisms withstand extreme pressure? Is the revenue structure sustainable in the long term? How can data be transformed into tradable financial assets? In the absence of systemic risk hedging, how can institutional funds safely enter the market? These issues are easily obscured by the frenzied narrative of a bull market, and only come to the forefront again when the market cools down. In his recent article, "In Defense of Exponential Growth," Haseeb Qureshi points out that the market often misjudges the value of Ethereum, Solana, and next-generation L1 blockchains (such as Monad and MegaETH) because it falls into the "error of linear thinking": it uses traditional models such as P/E ratios and revenue metrics to judge blockchains, and treats companies with exponential growth as steady-state businesses. He firmly believes that the pricing logic of L1 projects is similar to that of biotechnology: a mere 1% to 5% probability of becoming the next Ethereum or Solana is enough to rationally justify their multi-billion dollar valuation (i.e., the "probability premium"). Therefore, long-term conviction is the real advantage in crypto investing that is often forgotten by most. Looking back at Dragonfly's investment portfolio over the past three years, a complete chain from underlying infrastructure to upper-layer applications can be clearly outlined: Public blockchains and scaling: Monad (seed round 2023), MegaETH (2024), Prodia (2024), Caldera (2023), etc.; Trading infrastructure: Lighter (2024), Level (2024), Orderly (2023 expansion), Bitget (2023 strategic round), etc.; Stable assets and returns: Ethena (multiple rounds in 2023-2024), Pendle (2023), etc.; Data and tools: Kaito (Series A, 2023), Polymarket (Two rounds, 2024-2025), etc. This is not a strategy of casting a wide net, but a clear preference: prioritize betting on long-term gaps in key links, and then look for key pieces of the puzzle in each link. This deep understanding is directly reflected in Dragonfly's investment preferences. They seem to rarely pursue whether a project can achieve several times growth in the short term, but rather care more about whether the mechanism or product can still be valued by the industry five or even ten years later. Core Differentiated Advantages and Challenges The underlying logic of Dragonfly's success lies in two mutually supportive differentiated pillars. First, Dragonfly boasts a strong secondary market trading team, a fundamental difference from many purely primary market VCs. This strategic move, established as early as 2019, manages over $1 billion in liquidity, creating a strong competitive advantage for its investment decisions. The L2 team can capture real market sentiment, fund flows, and narrative shifts much earlier. Their sensitivity to indicators such as liquidity and liquidation pressure far surpasses that of traditional primary VCs, allowing them to feed real-world data into primary market decisions. Haseeb Qureshi has publicly stated that the secondary market is not an exit strategy, but rather an outpost for investment. Secondly, Dragonfly's investment in multiple trading platforms such as Bitget and Bybit aims not only to increase the equity value of the exchanges themselves, but also to transform them into distribution amplifiers and liquidity channels for stable assets. Dragonfly has successfully integrated its supported stable assets (such as Ethena's USDe) into the exchange system through strategic deployment on trading platforms. Once stable assets can be used as collateral or the underlying assets of trading pairs on exchanges, it will greatly stimulate user demand and purchases, thereby rapidly expanding the issuance scale of stablecoins. Admittedly, the best time to evaluate a VC isn't during a bull market, but rather when everyone is less inclined to invest. The primary crypto market has cooled significantly over the past year. According to RootData statistics, there have been 1058 funding events recorded so far in 2025, a 46% decrease from the peak of 1962 in 2022. In this waning sentiment, most funds have proactively slowed down, with some capital simply shifting towards AI or traditional technologies. Against this backdrop, competition for high-quality projects has intensified. Dragonfly not only needs to compete with well-funded established VCs like Paradigm for early-stage star projects, but also faces the impact on liquidity from the entry of traditional financial investment giants. In addition, leading exchanges are also deploying their investment and incubation departments to develop vertical sectors. This poses a severe challenge to Dragonfly's project acquisition, ecosystem control, and long-term holding capabilities. Furthermore, as cutting-edge technologies such as AI become deeply integrated with encryption, a key challenge for investment institutions like Dragonfly, with a pure encryption background, is whether their expertise will be recognized by the founders when acquiring high-quality cross-industry projects. Conclusion ChainCatcher previously interviewed several early Crypto investors, mentioning in their article "The New Cycle and Old Rules of Crypto VCs" that many native crypto VCs, indulging in narrative-driven and short-term speculation, face a mismatch between value capture and risk-taking. Dragonfly's demonstrated trading instincts, secondary market hedging capabilities, and emphasis on stablecoin cash flow precisely return to the old rules of long-term USD funds: meticulous management of systemic risk and the search for sustainable revenue models with endogenous growth momentum. From this perspective, Dragonfly's emergence as a winner in this cycle is a microcosm of fund managers returning to traditional rules in the new crypto cycle. However, facing competition from traditional giants, traditional financial investment giants, and leading exchanges, as well as the professional challenges brought about by the integration of crypto and cutting-edge technologies, Dragonfly must consider how to extend this trading instinct to cross-domain technological infrastructure to maintain its long-term competitive advantage if it wants to break through its existing growth boundaries.