The crypto market abandons speculation: how due diligence is reshaping investments

Partners at Pantera Capital, two of the most influential venture capitalists in the industry, have recently analyzed a fascinating paradox in the current market. In 2025, total funding for crypto projects reached a record $34 billion, yet transaction volume plummeted nearly 50% compared to the peaks of 2021-2022. This apparent contrast tells a deeper story about a return to professionalism and rationality in crypto venture capital, where rigorous due diligence and informed project evaluation have become the true keys to competition.

The End of the Speculative Abundance Era: Why the Market Has Become More Selective

The phenomenon of the past two years, 2021 and 2022, has been called “the metaverse era.” During that time, zero interest rates and abundant liquidity fueled an unprecedented explosion of speculative activity. Capital flowed freely into projects promising ambitious visions but lacking solid foundations. Investors faced significant challenges in accurately assessing the success potential of metaverse projects, leading to widespread funding of initiatives that perhaps should not have received any capital. Logically, how could everyone be expected to enter a fully digital world when even stablecoins were not clearly regulated?

Meanwhile, the market was driven by the “altcoin bull market,” heavily involving retail investors, family offices, and small entrepreneurs in early-stage projects. Today, the scenario is radically different. The market is dominated by Bitcoin, Solana, and Ethereum, and without the speculative fervor of altcoins, new retail investors are far less inclined to invest in early-stage projects. Capital now mainly comes from professional and institutional crypto funds, characterized by rigorous due diligence and selective allocation. This means fewer transactions, but higher quality and larger amounts per deal.

Additionally, with real use cases like stablecoins and digital payments emerging, traditional fintech venture capital firms have entered the sector, bringing an even more selective approach to project evaluation.

Clear Exits and Mature Infrastructure: Completing the Investment Cycle

One of the most significant changes concerns clarity on exit pathways. Circle’s IPO marked a crucial turning point, concretely demonstrating to venture capital investors how a crypto project can progress from early stages to public listing. With examples like Circle and Figure, which is pioneering real-world asset tokenization, investors have gained previously absent certainty. It is now finally possible to trace a coherent trajectory: from seed round to Series A to public listing.

Historically, crypto exits mainly occurred through Token Generation Events (TGEs), especially in the last two years. Today, the methods have evolved toward public market listings, as investing in equity and tokens involves entirely different counterparts and expectations. This shift toward equity financing is also one of the main reasons for the observed contraction in transaction numbers.

The infrastructure is finally ready to support these large-scale exits. What once seemed to require a decade—such as approval of Bitcoin ETFs—has been accelerated, creating a mature ecosystem where venture capitalists can more confidently assess the likelihood of a project moving from seed to public listing, significantly reducing perceived sector risk.

New Investment Tools: DAT and Beyond, Where Due Diligence Abandons Speculation

Recently, Digital Asset Treasury (DAT) has gained attention, embodying a more sophisticated understanding of crypto markets. If we think about traditional investment history, one could buy crude oil directly or purchase shares of an oil company. Buying shares was more profitable because it involved acquiring a “machine” that continues to extract, refine, and create value. DAT represents this “machine” in the digital assets world: they do not passively hold assets but actively manage them to generate higher yields.

The recent cooling of the DAT market does not signal failure but a positive evolution. The market is realizing that it’s not just about speculation but a crucial factor: the execution capability of the management team. This is a healthy change, signaling a return to rationality and a focus on real quality. DATs will not be a passing trend; actively managed investment tools will always retain value. Looking ahead, project foundations may transform into DATs, managing their assets through more professional capital market instruments rather than remaining as often nominal structures today.

Geographically, while the DAT boom in the U.S. shows signs of slowdown, significant growth potential remains in Asia-Pacific and Latin America. In the long term, market consolidation will favor only those DATs with strong executive teams capable of continuously growing their managed assets.

Frontiers of Crypto Venture: Tokenization, Zero-Knowledge Proofs, and Consumer Applications

Looking to the future, investments will mainly focus on two transformative directions. The first is tokenization—although already a known theme, it represents a trend destined to last decades and is just beginning its maturation phase. Since 2015, when it was merely a theoretical idea, it took ten years for the sector to reach a stage where institutions and real clients participate—similar to the early days of the internet, when traditional newspapers simply went online.

Today, the “copy-paste” of assets onto the blockchain is an effective efficiency and globalization tool, but the real potential lies in the fact that these assets can be “programmed” via smart contracts, creating new financial products and risk management models previously unimaginable.

The second direction involves ZK-TLS technology, or “proof of network.” Blockchain relies on the principle of “garbage in, garbage out”: if data is incorrect, blockchain has no utility. ZK-TLS technology verifies the authenticity of off-chain data—bank statements, transaction histories—and brings it on-chain without exposing the data itself. This enables behavioral data from apps like Robinhood or Uber to interact securely with on-chain capital markets, fostering innovative applications.

Notably, JPMorgan was among the first partners of Zcash and Starkware, demonstrating that the intuition behind zero-knowledge proofs has existed for some time, but only now do technological and market conditions allow large-scale application. With the right infrastructure and available talent, zero-knowledge proof technology is reaching maturity.

Simultaneously, stablecoins undeniably represent the killer application of tokenization. With increasingly clear regulation, they are unlocking the true potential of “money over IP,” making global payments extraordinarily cheap and transparent. In Latin America and Southeast Asia, where the ideal entry point for mass crypto adoption is through stablecoins, the potential remains enormous.

Consumer applications and prediction markets are emerging as another explosive sector. From pioneers like Augur to today’s Polymarket, the sector allows anyone to create markets and bet on any topic—corporate results, sporting events—offering not only innovative entertainment but an efficient, democratic information discovery mechanism. The potential of prediction markets in terms of regulation, economy, and transparency is becoming clear, enabling the creation of markets on any subject and bringing unprecedented amounts of information into news and trading sectors.

Public Investments and Value Comparisons: When Due Diligence Guides Choices

On-chain capital markets are not just a copy of traditional markets. In Latin America, many people make their first Bitcoin investment via platforms like Bitso, without ever having bought stocks, yet they may soon access complex derivatives like perpetual contracts. This “generational financial leap” means they may never use traditional Wall Street tools again, perceiving them as inefficient and hard to understand.

In comparing Robinhood and Coinbase as three-year investment opportunities, interesting prospects emerge. Robinhood aspires not just to be a broker but to vertically integrate all phases—from clearing to trading—becoming an integrated fintech platform controlling its destiny. Coinbase, with a broader vision of bringing everything on-chain, faces a challenge requiring 10-20 years of development. However, the market may underestimate Coinbase’s institutional potential and international expansion. With clearer global regulation, Coinbase could dominate the worldwide market by offering “crypto as a service” to many traditional financial institutions, demonstrating how diligent growth strategies create significant opportunities.

Dedicated Payment Chains and the Future of Privacy: Balancing Value and Technology

Dedicated payment chains for stablecoin payments present intriguing dynamics. Building an optimized chain for specific scenarios like payments, in terms of scalability and privacy, has tangible value. Stripe launched Tempo, a non-neutral chain that can reach significant scale thanks to company resources. However, in the long run, value will tend to flow toward users, not platforms trying to block them. Users will always choose the most open and liquid environment, not a closed chain. In the open crypto world, the competitive advantage of proprietary channels remains very limited.

Regarding privacy as an investment sector, perspectives diverge. Privacy is a function, not an isolated product. Almost all applications will need privacy features, but this function is unlikely to capture value independently, as any technological advance can become open source. The investment opportunity lies not in the technology itself but in those who can combine it with compliance, offering commercial solutions that become industry standards, where due diligence on compliance is decisive.

The Lockup Debate and the L1 War: Rationality in Tokenomics Design

The issue of token lock-up periods divides the market. Some advocate four years, others favor immediate unlock. However, the very premise is often flawed: the common belief “I invested, so it must be worth” does not reflect the reality of venture capital, where 98% of projects end at zero. If a project fails, the primary cause is the lack of real value, not lock-up design.

From a project perspective, a reasonable lock-up period—say 2-4 years—is necessary and strategic. It gives the team time to develop the product and reach milestones, preventing early price crashes caused by premature selling. Crucially, lock-up should be equal for founders and investors. The guiding principle is “one team, one dream”: if an investor seeks special clauses to exit early, it signals a lack of long-term commitment, damaging the project’s credibility.

The “L1 public chain war” will continue, but not with the previous frenzy. Few new L1s will emerge; existing ones will persist thanks to their communities and ecosystems. The focus now is on how L1s capture value—a positive evolution. It’s too early to declare L1s dead, as technology constantly evolves and mechanisms for value capture are still being explored. Solana exemplifies this: declared dead by many, it continues to generate significant opportunities for those who trust the project. As long as on-chain activity exists, there will always be a way to capture value. Ultimately, “priority fees decide everything”: where there is competition, there is value, and diligent assessment of these dynamics remains the hallmark of true venture capital expertise.