The cryptocurrency primary market—the arena where new blockchain projects raise capital through private sales, seed rounds, and venture funding—has entered a period of profound transformation. Once characterized by explosive growth and record-breaking fundraising, today’s landscape reflects a more cautious, strategic, and increasingly complex ecosystem. As investor sentiment shifts and macroeconomic pressures persist, understanding the evolving dynamics of the primary market is essential for founders, investors, and participants navigating Web3’s next chapter.
Declining Activity and Shrinking Deal Flow
Recent data paints a clear picture: the volume and frequency of fundraising in the crypto primary market are declining. According to RootData’s April 2025 report, total funding amounted to $685 million across just 65 projects—marking a 37.7% year-over-year drop and the lowest project count since February 2021. This sustained downturn signals a maturation phase where speculative ventures are being filtered out, and only projects with strong fundamentals are securing capital.
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This contraction isn't isolated—it reflects broader industry trends. With liquidity tightening and secondary market performance remaining volatile, many venture capital firms are reevaluating their portfolios and deployment timelines. The era of rapid, high-valuation raises appears to be giving way to a more disciplined investment approach focused on sustainable growth and real-world utility.
The Rise of AI + Crypto: Hype or Real Innovation?
One of the most discussed narratives in recent cycles is the convergence of artificial intelligence (AI) and blockchain technology. Many investors and entrepreneurs have positioned AI + Crypto as a defining trend for 2024–2025. However, perspectives vary widely on its authenticity.
AllianceDAO partners have publicly questioned the legitimacy of most AI-driven crypto projects, suggesting that up to 90% of them are built on superficial synergies rather than meaningful integration. While AI offers compelling use cases—such as decentralized compute networks, model provenance tracking, and data monetization—the challenge lies in translating these concepts into scalable, economically viable protocols.
Despite skepticism, genuine innovation persists. Projects exploring data assetization, model assetization, and decentralized inference layers are attracting serious attention from forward-thinking VCs. These efforts aim to solve real problems like trustless AI training, privacy-preserving computation, and fair compensation for data contributors—cornerstones of a future-proof digital economy.
VC Transformation: From Funders to Operators
In response to market headwinds, some of the most prominent crypto venture funds are undergoing structural changes. ABCDE, a well-known player in the space, has ceased direct investments under its traditional model and instead launched Vernal, a platform designed to support portfolio companies beyond capital alone.
This shift reflects a growing recognition that funding alone is insufficient. In today’s environment, VCs must act as active operators—providing go-to-market strategy, technical guidance, compliance support, and community-building expertise. The new mandate isn’t just to invest but to accelerate.
Other firms are expanding into adjacent services such as market-making, liquidity provisioning, and even incubation programs. This evolution underscores a broader theme: survival in the current cycle depends on adaptability and value creation beyond check-writing.
The "Paper Wealth" Dilemma and Token Unlock Risks
A critical issue plaguing many early investors and venture funds is the phenomenon of "paper wealth"—where portfolio gains remain unrealized due to restrictive token unlock schedules.
LD Capital highlighted this challenge in mid-2024, noting that while many of their portfolio projects showed strong paper returns post-listing, VC-held tokens remained fully locked. With high FDVs (Fully Diluted Valuations) set during bullish periods but limited circulating supply, the risk of market dumps upon unlocking looms large.
This "hell mode" scenario creates tension between long-term builders and short-term traders. Projects face immense pressure when major token unlocks occur, often leading to price volatility and reputational damage—even if fundamentals remain strong.
To mitigate these risks, more teams are adopting staggered release models, community-aligned vesting schedules, and OTC (over-the-counter) arrangements to manage sell pressure responsibly.
Frequently Asked Questions
Q: What defines the primary market in crypto?
A: The primary market refers to the initial sale of tokens or equity by blockchain projects to early investors via private rounds, seed funding, or public sales like IDOs. It precedes trading on exchanges (the secondary market).
Q: Why are fewer projects raising funds in 2025?
A: Market saturation, reduced liquidity, increased regulatory scrutiny, and investor fatigue after the 2021–2022 boom have led to a more selective funding environment. Only projects with clear product-market fit and experienced teams are securing capital.
Q: How are VCs adapting to current market conditions?
A: Leading crypto VCs are shifting from passive investors to active partners—offering operational support, strategic guidance, and post-investment services. Some are also launching incubators or alternative vehicles like token funds and special purpose acquisition entities.
Emerging Investment Themes: Infrastructure and Real-World Assets
While speculative narratives fade, capital is increasingly flowing into foundational layers of the Web3 stack:
- Web3 gaming infrastructure: Investments are focusing on scalable engines, cross-chain interoperability, and player-owned economies.
- DePIN (Decentralized Physical Infrastructure Networks): Projects leveraging token incentives to build real-world networks (e.g., wireless, compute, storage) are gaining traction.
- RWA (Real World Asset tokenization): From real estate to bonds, turning tangible assets into tradable digital tokens is emerging as a high-potential vertical.
- Developer tools: Enhanced debugging environments, modular frameworks, and secure deployment pipelines continue to attract funding.
These areas represent long-term bets on adoption rather than short-term price movements—aligning with a maturing ecosystem.
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Data Platforms and On-Chain Intelligence
As decision-making becomes more data-driven, tools that provide visibility into both primary and secondary markets are rising in importance. Platforms like RootData analyze funding patterns, investor behavior, and listing probabilities—helping participants identify promising opportunities before they go mainstream.
For example, RootData identified 76 projects valued under $300 million that could be prioritized for Binance’s public listing program based on historical investment patterns of top-performing funds. Projects like Puffer Finance, DappOS, and Ultiverse have emerged as potential candidates due to alignment with exchange criteria around fundamentals and decentralization.
Such insights empower investors to make proactive rather than reactive decisions—an edge in today’s competitive landscape.
Frequently Asked Questions
Q: What role do data platforms play in the primary market?
A: They offer transparency into funding trends, investor networks, valuation benchmarks, and listing likelihoods—helping founders target the right partners and investors identify high-potential projects early.
Q: Are meme coins impacting primary market dynamics?
A: While meme coins dominate social chatter and secondary markets, they rarely raise significant capital through traditional primary channels. However, their popularity can influence investor appetite for novelty-driven narratives.
Q: How can startups improve their chances of securing primary funding?
A: Focus on solving real problems with a clear roadmap; demonstrate technical progress via testnets or MVPs; engage authentically with communities; and align with investors who offer strategic value beyond capital.
Looking Ahead: Consolidation and Renewal
Folius Ventures predicts a major industry “shakeout” within the next 18 months—a consolidation phase where weaker projects fail or merge, making room for stronger ones to emerge. This cleansing process may pave the way for a new wave of innovative protocols to gain prominence in the secondary markets by 2026–2027.
Until then, resilience will define success. Projects must focus on sustainable tokenomics, transparent governance, and delivering measurable user value. For investors, patience and selectivity will yield better long-term outcomes than chasing hype.
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Core Keywords:
- Primary market
- Crypto VC
- AI + Crypto
- Token unlocking
- Web3 infrastructure
- Funding trends
- Venture capital
- RWA
As the dust settles from previous bull runs, the crypto primary market is recalibrating—not collapsing. It’s becoming leaner, smarter, and more resilient. Those who embrace this reality stand the best chance of shaping the future of decentralized technology.