- DeFi investments have flattened.
- Crypto venture capitalists still see plenty of action.
- They described three key investment areas.
When Bitcoin soared to over $100,000 in December, DeFi failed to move in tandem, as it has in the past.
No boom came. As interest waned, dozens of once-popular DeFi tokens plummeted more than 70% from their highs.
Even so, venture capitalists at three firms told DL News they are still excited about the sector’s growth picture.
“Liquid opportunities are starting to become extremely attractive with the recent decreases in price,” Gleb Dudka, a principal at Greenfield Capital, told DL News.
He said Greenfield is looking to add both liquid and private investments to its books.
The value of deposits to DeFi protocols — a rough proxy for investor interest — sits at around $118 billion, down 38% from the sector’s high four years ago.
Amid the stagnation, venture investment has slowed down too.
In 2021, venture firms piled a record $36 billion into crypto. In 2024, that amount dropped 73% to just $9.5 billion.
Here’s three DeFi trends venture firms are putting their money behind.
The MEV play
MEV, or maximal extractable value, is blockchain-specific arbitrage technique carried out by sophisticated trading bots.
Bots pay to reorganise onchain trades in the most profitable way. Doing so helps keep the prices of assets on decentralised exchanges accurate. But bots can also negatively affect traders through sandwich attacks.
MEV is a big market. A 2025 joint report from the European Banking Authority and the European Securities and Markets Authority found that MEV bots had made as much as $3 billion in profits on Ethereum since 2020.
That’s leaving a lot of money on the table, said Dudka.
Greenfield is interested in investing in DeFi protocols that control the transaction supply chain, enabling them to sequence their own transactions.
This means the DeFi apps themselves can start profiting from MEV instead of bots, and also protects the app’s users from the negative forms of MEV.
“Apps could start recapturing hundreds of millions of dollars that are currently being leaked out of the system,” Dudka said.
‘Convergence’ bets
Other venture firms are looking to invest in projects that tie together the traditional financial world and DeFi.
Alex Felix, chief investment officer at CoinFund, calls these kinds of investments “convergence bets.”
“We’ve really been looking for opportunities where there’s kind of an enterprise or institutional angle, as well as a retail angle,” he told DL News.
Felix said the best way for DeFi to grow is by opening up products and liquidity to more investors — particularly institutions.
This can take many forms. Felix said CoinFund is eying offerings that make it easier for institutions to navigate DeFi, and allow users to shift more easily between traditional financial markets and crypto.
Some protocols are already working on initiatives to attract institutional investors.
Aave, the leading DeFi lender, recently announced a new initiative called Horizon that caters to sophisticated investors. Lido, the Ethereum liquid staking protocol,is courting institutional investors with tailor-made products.
Decentralised derivatives
Perpetual futures, a type of futures contract that never expires, are the most popular way to bet on price movements on crypto.
Hyperliquid, a perpetual futures platform, is one of the most successful DeFi protocols in recent years.
After starting in early 2023, it rode the wave of perpetual futures hype and is now the biggest such market in DeFi, registering $187 billion in trade volume in February.
Tom Schmidt, a partner at crypto venture fund Dragonfly, said his firm is betting the trend will continue to grow.
“Decentralised perps are finally having their moment,” he told DL News. “We finally have the technology to match the performance and user experience of trading on a centralised exchange.”
Decentralised perpetual futures exchanges have several advantages over their centralised counterparts. Proponents argue they offer traders better prices, more flexibility, and are more transparent.
Schmidt said Dragonfly is focused on investing in similar products that it believes can further grow the size of the market.
Such products, Schmidt said, are diversifying away from the old norm of users connecting their browser wallets to a desktop interface.
“We’re seeing prosumer terminals, Telegram bots, and mobile apps all hit their stride and take off in a big way, also expanding into more mainstream user bases,” he said.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.