The Age of Centralization Arrives: In the first half of 2026, crypto VC funding hits $13 billion; the seed round collapses by 88%. Traditional institutions dominate “control” rather than betting.
Written by: Henry Kim, Ryan Yoon (Tiger Research)
Compiled by: AididiaoJP, Foresight News
Key takeaways
In the first half of 2026, net capital inflow into the crypto market reached $13.3 billion—roughly comparable to the $13.2 billion scale of all of 2024—yet there were only 435 funding rounds, down 78% from the 1,978-round peak in 2022.
The market is splitting into two types of players: a small number of large crypto-native VC firms focus on leading investments, while exchange-backed VCs actively participate thanks to their liquidity advantages; meanwhile, mid-sized institutions lacking clear competitive advantages are being quickly squeezed out.
Funding rounds in the gaming sector have crashed by 96%, dropping from 141 deals in 2024 to just 5 in the first half of 2026.
Capital inflows into the payments and stablecoins track, as well as the centralized exchange (CEX) track, are driven almost entirely by M&A transactions.
Traditional financial institutions participated in 54.5% of all investment deals in the first half of 2026.
The 2021 market: a speed-and-decentralization strategy
The core strategy in the 2021 crypto investment market was speed and diversification of investment portfolios. Investors completed 1,750 deals that year (including seed rounds). With intense speed competition, a single firm like AU21 Capital could average more than 13 deals per month.
At the time, investment decisions were simplified to the TGE timeline and tokenomics. Since returns could be generated just from token issuance, most VC firms adopted a “spray-and-pray” strategy—regardless of valuation, they dispersed capital across dozens or even hundreds of projects.
Execution speed takes priority over deep due diligence. The next round of fundraising is completed almost instantly; VCs that miss one round often chase a higher valuation to invest in the next—this FOMO pattern keeps repeating across the industry.
Many VCs that used this strategy did not survive the subsequent bear market; the surviving institutions completely changed the way they play.
Which VCs survived: the landscape has changed
Lead investors: past and present
We first look at lead-investing data—historically, rounds dominated by large VCs.
Some VCs still actively lead rounds, while others have completely disappeared or have recently emerged. Because leading investing always requires reputation and large-scale capital, only large institutions can meet the conditions. Most of the institutions that dominated large rounds in the past have proven resilient and still remain in the top ten today.
A split among surviving VCs
Looking at the latest data from 2024 through the first half of 2026, crypto-native VCs and major mature institutions are concentrating resources on leading rounds and making deeper investments into individual projects. They have shifted toward fewer deals and higher due-diligence thresholds, and they are also pursuing board seats and greater governance influence.
Meanwhile, for cumulative participation rounds that did not involve leading investing, an entirely different landscape emerges.
Among the top 15 VCs ranked by participation rounds from 2024 to the first half of 2026, exchange-affiliated institutions hold a large number of seats. Exchanges prefer to participate rather than lead. Coinbase Ventures ranked first with 140 deals, OKX Ventures second with 94 deals, and YZi Labs third with 92 deals.
Ranked seventh, HashKey Capital is the venture arm of Hong Kong exchange HashKey Exchange; ranked fourteenth, Mirana Ventures is the venture arm of Bybit. Through their respective venture arms alone, five of the top 15 are major exchanges.
Large VCs focused on lead investing, such as Polychain and Pantera Capital, are actually ranked further back in terms of overall participation.
CEX VCs have become key participants in major rounds thanks to the liquidity and marketing support provided by their platforms. Meanwhile, mid-sized VCs that lack economies of scale, brand awareness, or exchange-level liquidity support are being rapidly pushed to the margins of the market under the double squeeze of capital pressure and failed exits.
VCs leaving: The end of the “spray-and-pray” approach
Most of the VCs that built broad investment portfolios by quickly monetizing tokens in the previous bull market are gone. AU21 Capital, LD Capital, and Shima Capital saw their deal volumes drop by up to 98.9%, and their influence has basically been reduced to zero.
Strategies driven by short-term narratives completely failed in a long bear market and a tighter regulatory environment. The main reasons were that they failed to build real differentiation; at the same time, overall crypto capital shifted toward projects with a certain level of maturity, and financing opportunities for new early-stage projects dropped dramatically—those opportunities that VCs depended on no longer exist.
Investment rounds: buy the fruit, not the seeds
Seed rounds collapse
In the first half of 2026, there were only 81 seed rounds—down 88% from 694 in 2022. The market’s aversion to early-stage projects with unproven business models and higher risk is evident. This also shows up in the overall financing structure: seed rounds were 35.3% of all deals in 2022, but fell to 18.7% in the first half of 2026.
The decline in seed rounds reflects both investors’ risk aversion and a shortage of early-stage projects. It captures two signals at once: market contraction and market maturity.
Capital concentrates on later-stage rounds
Based on capital allocation, Series A and subsequent later rounds accounted for 75.2% of total investment. Seed-stage investments briefly became the majority during the 2023 bear market, but after the market entered recovery, capital was quickly reallocated to companies that already had sufficient funding.
In the first half of 2026, total Series A funding ($745 million) exceeded all seed-round funding ($423 million), becoming the largest category among the rounds.
The average deal size shows a clear stepwise increase: $5.4 million for seed rounds, $22.4 million for Series A, $127 million for Series C, and $202 million for Series E. While the sample size for later rounds is smaller, these companies have already grown their revenues and valuations, so the amount of capital involved per round is correspondingly larger.
The overall market: capital is concentrated, and deal volume declines
Capital and deal volume diverge
Total capital inflow in the first half of 2026 reached $13.3 billion, while the total number of transactions was only 435—just 22% of the 1,978 deals at the peak in 2022. From 2024 to the first half of 2026, the capital scale stayed flat or increased, but it was highly concentrated in far fewer deals.
The amount of VC’s short-term, small, diversified bets chasing token liquidity events has dropped sharply, while traditional financial institutions’ large direct investments have increased significantly. Institutions use stricter standards: they no longer just look at token listing timelines or market narratives, but instead assess whether a company has an auditable revenue structure and the necessary regulatory licenses.
In the first half of 2026, there were 32 deals of $100 million or more, accounting for 7.4% of all deals—up significantly from 1.1% in 2024. Over the same period, the average deal size rose from $11.7 million in 2024 to $47.4 million in the first half of 2026—about a 4x increase.
This share increase came from two directions: the number of large deals rose, while small deals (including seed rounds) disappeared, leading to a decline in total deal volume. As a small number of surviving projects began to dominate the market, and with small deals gone, the proportion of the limited number of large deals naturally became higher.
Traditional institutions directly participate in VC rounds
The share of investment deals participated in by traditional financial institutions rose from 29.2% in 2018 to surpassing half for the first time in 2021 at 53.9%. It fell to 45.2% during the 2023 bear market, then rebounded to 54.4% after the regulatory environment became clearer in 2024. In 2025 it dipped slightly to 50.9%, and in the first half of 2026 it reached 54.5% again. After crossing the majority threshold for the first time in 2021, participation has stayed consistently near high levels.
For example, a16z led Digital Asset (Canton Network’s developer) in a $355 million round, but the key institutional players—including BNP Paribas, HSBC, S&P Global, and Hanwha Investment Securities—participated directly rather than through VC subsidiaries.
In the past, most investments went into the earliest stages. With the development of crypto VCs and the entry of traditional investors, more capital has shifted to companies that have reached a certain level of maturity.
Each track: adapting to the new environment
2024 was the year when spot Bitcoin ETFs were approved and the regulatory environment improved, creating—first time since the bear market—a clear track-level flow of capital. This analysis uses that as the benchmark for comparison across tracks.
In 2024, the infrastructure track held a majority share of total invested capital at 50.9% in the year when Bitcoin ETFs were approved. By the first half of 2026, that share had dropped sharply to 14.8%. In its place were payments and stablecoins (25.3%), centralized exchanges (18.2%), and prediction markets (17.5%), completely reshaping the track landscape.
This shift indicates that blockchain infrastructure has moved from being a standalone investment target to a platform for institutions’ actual business use. Typical examples include Robinhood running its own Layer on Arbitrum, and Securitize using Solana and Avalanche as settlement layers while listing on the NYSE. In other words, the core demand in today’s capital market has shifted from building brand-new protocol infrastructure from scratch to operating real-world financial services on top of existing infrastructure layers.
The laggards: gaming, NFTs, and social
Deal volumes across these three tracks have all dropped significantly. Gaming fell from 141 deals to 5; NFTs from 27 to 2; and social and entertainment from 74 to 11.
Capital inflows also fell broadly. Gaming capital dropped from $758.6 million to $44.8 million; NFTs from $114.9 million to $14.7 million; and social and entertainment from $512.1 million to $70.1 million.
The gaming track has declined the most. Early GameFi models relied too heavily on token rewards rather than sustainable gameplay. Once new user growth slows down, it gets trapped in a “death spiral” (token value falling and user churn reinforcing each other). As a result, user traffic data—once a core due-diligence metric—lost reliability, and capital inflows were essentially cut off.
DeFi: low-key but solid
Deal volume in the DeFi track fell by 71%, but total investment fell by only about 34%. The average deal size actually rose from $4.5 million in 2024 to $10.4 million in the first half of 2026, indicating that as overall deal volume contracts, capital is concentrating into a small number of large transactions.
The main driving force is token sale rounds by the lending protocol Morpho, targeting institutions and investment companies. Leveraging a modular lending protocol, Morpho opens up the DeFi treasury market for institutions and redefines DeFi risk standards. On June 9, 2026, it completed a $175 million token round led by a16z crypto, Paradigm, and Ribbit Capital. This single transaction accounts for 17.7% of all DeFi investment in the first half of 2026, clearly reflecting how concentrated the market has become.
In other words, the DeFi track has shifted from broad ecosystem growth to capital concentrating on a small number of protocols that have already been validated by the market.
Payments and stablecoins: the fastest-growing track
Payments and stablecoin track deal volume continues to accelerate on a month-by-month average basis. Over the same period, total investment jumped about 20x from $143.9 million to $2.85 billion in the first half of 2026. But this growth is mainly attributable to a handful of large M&A deals.
The biggest exchange deal in the first half of 2026 was in March, when Mastercard acquired BVNK for $1.8 billion; the second-largest was in May, when Payward (Kraken’s parent company) acquired Reap for $600 million. Together, these two deals alone account for about 84% of total investment in the sector during the first half of the year. Cross-border payment and crypto card issuers such as Rain ($250 million) and KAST ($80 million) are also raising funds steadily.
These large-scale acquisitions show that traditional payment companies and major Web3 players have moved beyond simple commercial partnerships, turning to acquiring and directly taking control of stablecoin infrastructure. Stripe is the clearest example in the battle for ecosystem standards: it started in October 2024 with an $1.1 billion acquisition of Bridge.
After acquiring Bridge, Stripe partnered with Paradigm to build Tempo—a blockchain designed specifically for stablecoin payments—which successfully went live on the mainnet in March 2026. In the same year, in June, Zach Abrams, co-founder of Bridge, became the temporary operational head of Open USD (OUSD), a global stablecoin project with a coalition of over 140 participating companies.
The OUSD project has adopted Bridge, which Stripe acquired and has continued to develop, along with Tempo, which Stripe is building as the core initial infrastructure. Through technology and talent obtained via acquisition, Stripe simultaneously controls its own proprietary platform and an alliance designed to set industry standards. This shows that competition for stablecoin infrastructure has completely moved beyond company-level acquisitions and entered the stage of fighting over global market standards.
CEX: no longer needs venture capital
The share of total investment attributable to the centralized exchange (CEX) track jumped from 3.0% in 2024 to 18.2% in the first half of 2026. However, it’s hard to interpret this growth as traditional VCs expanding into new exchanges, because among CEX track investments from 2024 through the first half of 2026, M&A alone accounted for 75.5%. This proportion rose from 58.8% in 2024 to 78.9% in 2025, reflecting extremely high concentration.
Total capital inflow is down compared with the peak of the previous year by $19.4 billion, but it is still more than six times the $340 million figure from March 2024. Deal volume has not slowed: in the first half of 2026, there were 23 deals, averaging 3.8 per month—faster than 2.8 per month in 2024 and 3.0 per month in 2025.
CEX investment activity reflects a restructuring around a small number of major operators. Naver’s acquisition of Dunamu equity (still under regulatory review) was the largest announced deal in the period; next were Coinbase’s $2.9 billion acquisition of Deribit, and Kraken’s $1.5 billion acquisition of NinjaTrader.
MGX, the Abu Dhabi sovereign wealth fund, also fits this pattern with its $2 billion strategic investment in Binance. Meanwhile, existing large exchanges’ venture arms such as OKX Ventures and HashKey Capital are becoming even more proactive in participating in rounds and in their own acquisitions. As a result, CEX players are increasingly taking on a dual role—both the investment targets and strategic investors.
Prediction markets: an emerging track takes off
Prediction markets have become a track that provides liquidity for real-world macro indicators—such as economic data, elections, and policy decisions. The trigger for the track’s growth was the formal regulatory approval by the U.S. Commodity Futures Trading Commission (CFTC) in May 2025, which opened the door for large capital inflows from hedge funds and asset managers and moved it into regulated mainstream.
Kalshi’s cumulative trading volume surpassed $100 billion in June 2026. It completed a $1 billion funding round led by Paradigm in December 2025, and then completed another $1 billion funding round led by Coatue in March 2026.
Polymarket received funding from the Intercontinental Exchange (ICE, the operator of major traditional exchanges). In October 2025, ICE committed up to $2 billion (with $1 billion actually deployed); in March 2026, it added another $600 million, bringing cumulative investment to about $1.6 billion.
The prediction market track is not about competing among many new projects. Instead, it’s traditional financial institutions and top-tier institutional capital repeatedly putting large sums into the earliest two players to obtain regulatory approvals.
Custody: low-key but powerful
The custody track grew from $20.4 million in 2024 to $317.1 million in the first half of 2026—an increase of 15x. In the first half of 2026, Anchorage received a $100 million strategic investment from Tether; Anchorage alone accounts for roughly one-third of all investment in this sector during the same period.
For institutional asset managers to directly hold crypto assets, they must have custody infrastructure that meets regulatory requirements. This track grows as institutions increase demand for asset management and crypto custody services.
A commonality across the tracks above is that they maintain stable capital flows through the financing rounds mentioned above; and each instance of infrastructure demand is created by institutions entering the market.
A new standard for crypto capital: from betting to controlling
Overall, the focus of crypto investing has moved from planting short-term seeds to taking equity in companies that own infrastructure and protocols.
Before Bitcoin ETF approvals in 2024 and improvements in the regulatory environment, the crypto market was a field of indiscriminate betting, driven by small narratives around many projects. This strategy ultimately led to the collapse of the gaming and NFT tracks, and VCs that kept chasing them were weeded out.
Today, capital’s goal is no longer short-term bets, but long-term control over investment targets and on-chain infrastructure. It concentrates large amounts of money into a small number of targets that already have auditable revenue structures and regulatory licenses, or directly acquires equity to control the infrastructure itself.
Previously, investments in early-stage projects were a signal that VCs sent to the market. Investment behavior was interpreted as “smart money” entering, which would either push token prices up or attract retail investors to participate early. Today, this kind of structural capital directly acquires infrastructure and obtains licenses, rather than sending follow-on signals to retail investors.
Retail investors’ reaction to VC investment news is no longer strong. The core reason is that market capital itself has undergone structural changes. Retail investors also need to assess potential investments cautiously, just like today’s VCs. Old betting strategies no longer work for retail investors or VCs.