"No One Wants Them": VCs Split on Non-Financial Crypto and Web3 Use Cases

A clash of views has emerged online among leading crypto investors regarding the future of non-financial use cases in the crypto and blockchain space, including Web3 projects. The debate centers on whether these projects failed due to insufficient investor demand and poor product-market fit or if their most significant potential remains unrealized.

Crypto VCs divided on non-financial Web3 projects

On Friday, Chris Dixon of a16z Crypto sparked a discussion on X, noting that recurring fraud, questionable practices, and regulatory challenges have hindered the growth of non-financial crypto use cases and likely contributed to the recent market decline. These use cases, which include projects such as decentralized social media and other digital services, have faced persistent obstacles in gaining traction. Coinbase CEO Brian Armstrong responded directly to Dixon, expressing agreement with his assessment.

Countering Dixon, Haseeb Qureshi, managing partner at Dragonfly, argued that the failures of these projects stemmed from the simple fact that “no one wants them.” He emphasized that the projects did not succeed commercially, and external factors—such as regulators or prominent figures like Sam Bankman-Fried—were not responsible for their underperformance.

Let’s just admit it. They were bad products. They failed the market test. It was not Gensler or SBF or Terra that caused these things to fail, it was that no one wanted any of it. Pretending otherwise is cope.

Haseeb Qureshi

Nic Carter, founding partner at Castle Island Ventures, echoed Qureshi’s view and described Dixon’s argument as misleading. Carter noted that in venture capital, success depends on accurately gauging market demand within the typical 2–3 year investment period. Even if Dixon’s viewpoint proves correct over the long term, it does not excuse earlier misjudgments.

Meanwhile, venture capital investment in Web3 startups surged in 2025, nearly doubling from the previous year. The growth was driven largely by major financial firms, especially in the real-world assets (RWA) sector, which alone raised over $2.5 billion. Funding for crypto startups exceeded $8 billion in every quarter of 2025, marking the first time this level had been reached since 2022. By year-end, total venture capital investment topped $34 billion—representing a twofold increase over the $17 billion raised in 2024.

Investment Focus Shapes Perspectives

The differences in opinion reflect the firms’ distinct investment strategies. a16z Crypto maintains a broad portfolio, spanning financial use cases like Coinbase and Uniswap as well as Web3 projects in gaming, online content, and community platforms. Dragonfly, by contrast, concentrates on financial use cases and blockchain technologies that enable on-chain value transfer and risk management, backing projects such as the Agora stablecoin, the payment platform Rain, and Ethena, among others.