Analysis of the Three Major Trends in Crypto Venture Capital: From Token Dominance to Liquidity Venture Capital

The current financing environment is becoming increasingly severe, primarily due to the challenges faced by upstream capital returns and limited partners' funding. In the entire venture capital industry, the funds returned to limited partners by funds at various stages have decreased compared to previous years, leading to a reduction in the capital reserves available for investment by existing and newly established venture capital firms, which exacerbates the financing difficulties for founders.

This trend has had a significant impact on cryptocurrency venture capital. In 2025, despite a decrease in the number of transactions, the pace of capital deployment remained roughly the same as in 2024. The decline in transaction volume may be related to many venture capital funds approaching the end of their life cycles and a reduction in available funds. However, some large funds are still making large transactions, maintaining the stability of capital deployment.

In the past two years, merger and acquisition activities in the encryption field have continued to improve, providing strong support for liquidity and exit opportunities. Recent large-scale merger and acquisition cases have offered more guarantees for industry consolidation and exits for crypto equity venture capital.

In the past year, the total trading volume remained stable, with some larger-scale late-stage transactions announced to be completed at the end of 2024 and the beginning of 2025. This is mainly because more transactions are concentrated in the early stages, where capital has been relatively abundant.

From the perspective of the financing stage, accelerators and launch platforms rank first in terms of the number of transactions. Since 2024, a large number of such platforms have emerged in the market, which may reflect that in a tightening financing environment, founders are more inclined to issue tokens early to start projects.

The median size of early financing rounds shows a rising trend. Funding in the earliest stages remains abundant, with the median financing amounts for seed rounds, Series A, and Series B approaching or returning to 2022 levels.

Predictions for the Future of Encryption Venture Capital: Three Major Trends

1. Tokens will become the main investment mechanism.

The market will shift from a "token + equity" dual structure to a model of "single asset carrying value." In the future, there will be more emphasis on one asset corresponding to a set of value accumulation logic.

2. Fintech venture capital and encryption venture capital accelerate integration

Fintech investors are transitioning to the encryption investment space, focusing on next-generation payment networks, new digital banks, and blockchain-based asset tokenization platforms. This poses competitive pressure on crypto venture capital, especially in the stablecoin and payment sectors.

3. The Rise of "Liquidity Venture Capital"

"Liquidity venture capital" refers to seeking venture capital opportunities in the market of tradable tokens. This model has the following advantages:

• Higher liquidity means faster exit paths.
• Investment thresholds have been lowered, allowing for direct purchase of Tokens or through over-the-counter trading.
• Flexible position management suitable for funds of all sizes
• The capital operation is more flexible, allowing investment in quality tokens during bear market cycles.

The encryption field will continue to lead innovation in venture capital. The integration of public and private capital markets is a trend, and the crypto industry has already taken the lead in this regard. With more assets being put on-chain, "on-chain first" financing methods may become the choice for more companies.

It is worth noting that the return distribution in the encryption market tends to be more extreme, exhibiting characteristics of a "power law distribution". Nevertheless, the potential for asymmetric returns will continue to attract significant capital into the field of crypto venture capital.