Crypto VCs in Fiery Clash: Do Non-Financial Use Cases in Web3 Have a Future?

Crypto VCs in Fiery Clash: Do in Web3 Have a Future?

Top venture capitalists in the crypto world are locked in a heated online battle. The big question? Have in Web3 and blockchain truly failed, or is their best time still coming? This shows deep splits in how investors see the future of crypto beyond money-making apps.

What Sparked the ?

The fight kicked off on a Friday when Chris Dixon, a top leader at a16z crypto, dropped an article. He said in crypto have not grown because of years of scams, bad behavior that rips people off, and tough rules from regulators.

Think about apps like decentralized social media where users own their data, tools for digital identity that keep your info safe on blockchain, streaming platforms without big tech middlemen, systems for digital rights, and Web3 games with true ownership of in-game items. Dixon blames outside forces for holding these back.

But not everyone agrees. Haseeb Qureshi, a key figure at Dragonfly, fired back on Sunday. “ for crypto have failed because no one wants them,” he said flat out. He pointed to a lack of real demand from users and no strong product-market fit – meaning these apps just don’t solve problems people care about enough to pay for.

Time Horizons: Long Game vs. Quick Wins

Dixon pushed back by noting a16z crypto funds last at least 10 years. “Building new industries takes time,” he argued. Patient capital can bet on big changes that need years to mature.

Enter Nic Carter, founder of Castle Island Ventures. He sided with Qureshi, saying, “You don’t have the luxury of ‘waiting to be right’ in VC.” Funds deploy money in just 2-3 years, so investors must spot hot markets fast or risk missing out.

This highlights two paths in crypto investing: patient builders dreaming of Web3 revolutions versus short-term players chasing proven wins.

Why Struggle

• Scams and Hype: Early Web3 saw too many rug pulls and fake projects. This scared users away from non-money apps.
• Regulatory Heat: Governments cracked down on crypto, focusing on finance. Non-fin apps got caught in the crossfire.
• No Killer App: Unlike DeFi or NFTs that made quick money, social or gaming apps lack easy wins. Users stick to free Web2 options like Twitter or Roblox.
• Tech Hurdles: Blockchains are slow and costly for everyday use. Gaming needs fast speeds; social needs cheap posts.

Despite this, some see hope. Projects like decentralized social networks (DeSoc) are gaining users tired of Big Tech censorship. Web3 gaming lets players earn real value from playtime.

2025 VC Trends: Money Flows to Finance

This debate comes as VC cash pours into crypto in 2025. But where? Mostly to tokenized real-world assets (RWAs). These are things like real estate, bonds, or art turned into blockchain tokens. Safe, tied to real value, and easy to trade.

DeFi apps, wallets, and stablecoins also grab big bucks. Why? They work now. Users trade, lend, and borrow billions daily. Non-fin apps? They pull tiny revenue compared to that.

Related trends show Web3 money shifting from raw blockchains to user-friendly wallets and DeFi tools. This proves finance leads the way.

Portfolio Showdown: Dragonfly vs. a16z

Look at how these firms build bets:

Dragonfly: Finance First

Dragonfly focuses on money movers. Their portfolio stars include:

• Agora: Stablecoin and payments hub.
• Rain: Tools for onchain payments.
• Ethena: Maker of synthetic dollars.
• Monad: Fast layer-1 blockchain for finance apps.

They bet on infrastructure that shifts value and risk smoothly onchain.

a16z Crypto: Broader Web3 Vision

a16z mixes finance hits like Coinbase and Uniswap with wilder bets:

• Friends With Benefits: Community club for Web3 fans.
• World: Digital identity on blockchain.
• Yield Guild Games: Web3 gaming guild.

They chase gaming, media, and social – the Dixon defends.

Success Stories and Failures

Not all non-fin is doom. Lens Protocol powers user-owned social profiles. Farcaster grows as a decentralized Twitter rival. In gaming, Axie Infinity made millions before crashing, but it proved play-to-earn works.

Failures? Many DeSoc apps died from low users. Streaming platforms like Audius fight Spotify’s scale.

Key insight: Non-fin needs better UX. Make it feel like Web2 but with crypto superpowers like ownership and no bans.

What Does This Mean for Web3?

The matters because VCs steer billions. If finance dominates, Web3 becomes “Web-Fin.” But Dixon’s view says true decentralization needs non-money apps to own the future.

2025 data: RWA deals hit record highs. Yet, layer-2s like Base and Optimism host more social dApps. Gaming tokens rebound.

Future bets:

1. Solve Scalability: Cheap, fast chains like Solana or zk-rollups.
2. Real Utility: Identity for AI agents, gaming economies that beat Roblox.
3. Hybrid Models: Mix fin and non-fin, like social tokens for creators.

Final Thoughts

This over boils down to now vs. later. Dragonfly and Castle Island chase today’s winners. a16z plays the long game for tomorrow’s Web3.

Users decide. If decentralized social or games deliver fun and value, VCs will follow. Watch for user growth metrics – that’s the real product-market fit test.

Web3’s path splits: Stay finance-focused or build the full decentralized web? The debate rages on.

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