Crypto venture funding has contracted sharply even as stablecoins, prediction markets and on-chain derivatives produce the sort of revenue that earlier speculative crypto themes rarely delivered. Quarterly investment fell to $4 billion in the fourth quarter of 2025, with only eight new funds formed, placing the annualized pace near $16 billion—roughly half the $31 billion deployed during 2021, according to the figures cited in the analysis.
The pullback is creating a more selective market. Capital is increasingly concentrating around businesses that collect transaction fees, earn interest on reserves or operate trading infrastructure, rather than projects whose value depends mainly on token appreciation or virtual-land speculation. The analysis estimates that stablecoins, prediction markets and perpetual futures now generate combined annual revenue in the tens of billions of dollars.
That change has occurred while institutional exposure to crypto has grown through exchange-traded products. More than $175 billion in crypto assets was held through ETPs over the past year, according to the supplied figures, showing that public-market access has expanded even as early-stage venture formation has slowed.
Stablecoins become a major settlement business
Stablecoins sit at the center of the cash-flow shift. Total supply has exceeded $300 billion, while annual transfer volume reached $46 trillion, according to the analysis. After filtering estimated bot activity, the figure for “real” stablecoin transfers was placed closer to $9 trillion.
The distinction matters because gross blockchain volume can overstate economic use when automated trading and internal transfers are included. Even the lower estimate points to a payments and settlement system operating at a scale that is difficult to dismiss as a niche crypto activity.
Stablecoin issuers have also become substantial buyers of U.S. government debt. The analysis ranked issuers collectively as the 17th-largest holder of U.S. Treasuries, reflecting the reserve model used by the largest dollar-linked tokens. Tether’s 2025 profit from Treasury holdings alone was reported at more than $1 billion.
Public and traditional-finance companies are moving into the sector as well. Circle’s shares rose 167% in their first day of public trading, based on the figures supplied, while Stripe acquired stablecoin infrastructure company Bridge less than three years after its founding. Banks have begun issuing their own stablecoins, increasing competition in a market previously dominated by a small number of crypto-native operators.
Stablecoin-linked card spending is beginning to provide another measure of consumer use. Visa reported facilitating $3.7 billion in payments across 1.9 million cards in more than 200 countries over the past year. The company has outlined expansion plans covering more than 100 additional countries, although card payments remain a small fraction of the total stablecoin transfer market.
Trading platforms capture fee revenue
Prediction markets and perpetual futures have emerged as the other major revenue centers identified in the analysis. Intercontinental Exchange, the owner of the New York Stock Exchange, agreed to invest up to $2 billion in Polymarket, while Robinhood said event contracts had become its 11th business line to pass $100 million in revenue. Susquehanna has also built activity in the category.
The entry of established market operators gives prediction markets a different profile from the token-driven consumer trends that dominated previous cycles. Their business model is based on trading volume and fees, though it also depends on regulation and the legal treatment of event contracts across jurisdictions.
On-chain perpetual futures have become heavily concentrated. Hyperliquid accounted for 44% of on-chain perpetual futures volume, according to the analysis, despite a team reported to have only 11 people. Its prior-year profits were described as exceeding those of most publicly traded trading venues.
Coinbase’s agreement to acquire Deribit for $2.9 billion has set a significant valuation reference point for crypto derivatives businesses. The transaction places a premium on platforms with established liquidity, institutional relationships and recurring trading revenue rather than on projects relying solely on future network adoption.
Hyperliquid is also expanding beyond crypto-linked contracts. The platform reported $10 billion in total open interest, including $4 billion tied to non-crypto assets, with daily non-crypto trading volume around $3 billion. That activity suggests the largest on-chain derivatives venues are testing whether their infrastructure can compete for traders accustomed to conventional markets.
Fee growth exposes a valuation divide
Protocols generated $11 billion in fees over the past 12 months, according to the analysis, and at least 10 projects reached nine-figure annualized revenue. Yet the durability of that income varies considerably.
Axiom, a platform tied to meme-coin trading flows, recorded $100 million in fees in four months and $700 million in cumulative fees, the analysis said. Its quarterly revenue then fell 86% when meme-coin activity weakened. The episode illustrates why high fee totals alone do not settle the question of valuation: recurring demand, user retention and the source of trading volume remain crucial.
Consumer-facing crypto products have shown stronger evidence of repeat usage. Phantom reported 17 million monthly active users in 2025 and about $325 million in swap-fee revenue, according to the figures provided. The wallet operates without a token, making its revenue model closer to a conventional technology platform than to a token-led protocol treasury.
Tokenized real-world assets also expanded from $5.5 billion to $18.6 billion in reported market size over one year. Providers have benefited by selling infrastructure, compliance tooling and settlement services through contractual arrangements, rather than relying exclusively on public token markets.
The revenue concentration has sharpened a longstanding valuation imbalance between applications and base-layer networks. DeFi and financial applications generated 73% of on-chain fees at the end of 2025, while base networks accounted for 12%, according to the analysis. Yet base networks represented 91% of total protocol market value, compared with 6% for applications.
Using annual fees as the comparison, base networks were valued near 4,000 times fees, while applications traded around 17 times. Uniswap, shturl.c and Polymarket each reportedly generated more monthly fees than Ethereum and Solana. Fee multiples cannot capture every feature of a network—such as security, liquidity and developer ecosystems—but the gap shows how much public-market value remains concentrated in infrastructure tokens.
Funding drought could reach the next startup cycle
The slowdown in new crypto funds could affect company formation beyond the current market cycle. Fewer than 20 groups were described as actively making pre-seed and seed investments. Because a typical venture fund deploys capital across roughly three years, the limited number of funds launched in late 2025 could leave fewer financed startups entering the market through 2027 and 2028.
That pressure is compounded by competition for technical talent. Electric Capital data cited in the analysis placed the share of U.S.-based crypto developers below 20%, after nearly halving over the past decade. The supplied material also described a steep decline in blockchain developer activity in early 2026 as builders shifted toward artificial intelligence companies, though the scale of that movement will depend on future hiring and funding conditions.
Crypto’s market downturn has made the contrast more visible. The total value of digital assets fell to $2.3 trillion by early August 2026, according to the supplied market data, while stablecoin supply remained near a record $308 billion. Retail trading may have weakened, but dollar-linked tokens retained demand as trading collateral, cross-border settlement tools and reserve-backed payment products.
The more durable businesses are also gaining clearer routes to exits. The analysis counted $8.6 billion in mergers and acquisitions and 11 IPOs, alongside token-based liquidity. That combination gives founders and early backers more options than previous cycles, when token issuance often served as the primary path to liquidity.
A Delphi portfolio of 10 revenue-weighted cash-flow tokens returned 30.6% between January 2025 and May 2026, according to Delphi’s figures cited in the analysis. Over the same period, Bitcoin fell 17%, Ethereum declined 35% and Solana dropped 58%. The comparison does not establish a permanent investment rule, but it reflects the market’s recent preference for projects with measurable income over assets valued mainly on expectations of future network growth.
As stablecoins reshape payments, explore why they matter in Asia in this stablecoin adoption deep-dive.
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