Crypto VCs Shift Focus to AI? How are 6 Major Institutions Betting on Artificial Intelligence?

Author: TinTinLand

Over the past year, a significant shift has occurred in the global venture capital market: capital is flowing into AI at an unprecedented pace, while investment in the crypto industry has slowed considerably.

Let's look at two sets of

• On one hand, there's the crypto market: the total number of global crypto VC investments is expected to plummet from approximately 2,900 to 1,200 in 2025, a drop of over 60%.

• On the other hand, there is the AI ​​market: According to OECD data, global VC investment in AI will reach $258.7 billion in 2025, accounting for 61% of the total global venture capital investment, compared to only 30% in 2022.

This structural pressure differential has prompted a group of established crypto VCs to quietly adjust their course and begin deploying capital into the AI ​​sector.

On February 28, according to industry media reports, top crypto VC Paradigm is raising a new fund of up to $1.5 billion, with investments no longer limited to the crypto sector but expanding to artificial intelligence, robotics, and other cutting-edge technologies.

Are venture capitalists really abandoning encryption and turning to AI?

A closer analysis reveals that most leading crypto VCs haven't simply turned to AI, but rather are seeking new opportunities arising from the intersection of AI and crypto . AI requires computing power, data, identity, and payment infrastructure, which are precisely the problems that blockchain excels at solving.

TinTinLand has compiled a list of 6 of the most representative institutions to see which AI projects they have specifically bet on over the past year.

1️⃣ Paradigm: $1.5 Billion New Fund Bet on AI

Since its founding in 2018, Paradigm has been known for its in-depth research-driven investment style , with Uniswap, Coinbase, and dYdX being some of its classic success stories.

Back in 2023, Paradigm briefly removed “Web3” related terms from its official website, sparking market speculation about whether it was undergoing a strategic transformation.

In response to external criticism that "Paradigm is abandoning crypto," co-founder Matt Huang stated unequivocally, "We have never been more excited about crypto and continue to invest in it at every stage." However, he also emphasized that "the progress of AI is so interesting that it cannot be ignored. We do not believe that crypto and AI are in a zero-sum competition; there is a lot of overlap between the two."

Paradigm's recent representative layouts

🔹 Nous Research (April 2025)

Decentralized AI startup Nous Research completed a $50 million Series A funding round in 2025, led by Paradigm, valuing the company at $1 billion .

The company is dedicated to developing and training open, large language models, a stark contrast to the closed approach of centralized giant labs.

🔹 EVMbench (February 2026)

In early 2026, Paradigm and OpenAI jointly launched EVMbench.

This is a benchmark tool for evaluating the capabilities of AI models in the field of smart contract security auditing , providing a technological foundation for future AI-automated auditing tools.

🔹 A new $1.5 billion fund (February 2026)

According to multiple industry media reports, Paradigm is raising a new fund with a target size of up to $1.5 billion, which will expand its investment scope to AI, robotics and other cutting-edge technology fields .

The fund is still led by Paradigm's original research and engineering team, which means that its AI investment path continues its consistent style: prioritizing underlying technologies and infrastructure.

2️⃣ a16z: AI + Crypto Dual-Line Operation

Founded in 2009, Andreessen Horowitz (a16z) is one of the most influential VCs in Silicon Valley. In 2018, it established the a16z crypto fund to systematically invest in blockchain infrastructure and DeFi. With the explosion of generative AI, a16z quickly opened up a second front.

In early 2026, a16z announced the completion of a new fund raising of more than $15 billion , of which approximately $1.7 billion was specifically allocated to AI infrastructure investment.

Several a16z crypto partners have publicly stated that 2026 will be a crucial year for AI agents to move from the prototype stage to practical application pilots . AI and crypto networks have natural overlap in areas such as identity, payment, and incentive mechanisms , and are likely to form new directions for technological integration in the future.

a16z Recent Representative Investments

🔹 Thinking Machines Lab (June 2025)

In 2025, Thinking Machines Lab, an AI startup founded by former OpenAI CTO Mira Murati, announced the completion of a $2 billion seed funding round , bringing its post-money valuation to $12 billion . The round was led by a16z. This was one of the largest seed rounds in Silicon Valley history.

The company focuses on building safer and more versatile generative AI systems and has attracted a large number of researchers from institutions such as OpenAI and Meta to join it.

🔹 Cursor (2024-2025)

AI programming assistant Cursor received multiple rounds of investment from a16z between 2024 and 2025, and its valuation reached $29.3 billion after its Series D funding round in November 2025.

Cursor is one of the fastest-growing AI development tools. By deeply integrating large language models, it enables developers to perform complex tasks such as code generation, debugging, and refactoring using natural language. According to multiple industry media reports, Cursor's annual recurring revenue (ARR) has surpassed $2 billion.

🔹 Catena Labs (May 2025)

Founded by Sean Neville, co-founder of Circle and inventor of USDC, Catena Labs is dedicated to building tailored financial infrastructure for AI agents, including smart payments, identity verification, and low-cost settlement.

In 2025, the project completed an $18 million Seed round of financing , led by a16z crypto, with participation from Coinbase Ventures and other institutions.

3️⃣ Polychain: Deploying AI-Powered Trust and Identity Layers

Polychain Capital was founded in 2016 by Olaf Carlson-Wee, a former Coinbase employee, and has positioned itself as a crypto-native investment firm since its inception.

Polychain did not explicitly state "shifting from Crypto to AI," but its investment logic is closer to viewing AI as a new infrastructure layer opportunity for blockchain .

Polychain believes that the core bottlenecks of AI, such as computing power, data, and incentive mechanisms, are precisely the problems that blockchain excels at solving.

Polychain Capital's Recent Representative Investments

🔹 Billions Network (August 2025)

Billions Network is an identity infrastructure project that combines AI, privacy computing, and zero-knowledge proofs , allowing users to complete identity verification without revealing their personal data and providing a trusted identity layer for AI systems.

In August 2025, the project announced the completion of approximately $30 million in financing , with investors including Polychain Capital and other institutions.

🔹 Talus Labs (2024-2025)

In September 2025, Talus Labs completed a $10 million funding round led by Polychain Capital, marking Polychain's third investment in the project.

Talus Labs has proposed a concept called PredictionAI : combining AI agents with on-chain prediction markets to allow AI models to compete, predict, and make decisions in a transparent and verifiable environment.

🔹 Grass (2025)

Grass is a data network project for AI models. Through a DePIN model, Grass allows users to contribute bandwidth and network data resources , which are then used for training AI models.

In 2025, Grass completed a funding round of approximately $10 million, with investors including Polychain Capital. This marked Polychain's third investment in the project.

4️⃣ Pantera Capital: Investing more in DePIN and decentralized computing power

Pantera Capital was founded in 2003 as a global macro hedge fund. In 2013, it fully shifted its focus to crypto asset investment and was an early supporter of projects such as Circle, Coinbase, and Ripple.

Pantera Capital's AI investment logic stems from several core judgments: AI needs new computing and data infrastructure; Web3 can provide decentralized computing power and data networks; DePIN + AI will become the new infrastructure layer.

Pantera Capital's recent representative investments

🔹 Gradient Network (June 2025)

Gradient Network is a decentralized AI inference network that aims to leverage idle computing power from personal computers, mobile devices, and other devices to provide distributed inference capabilities for AI models, thereby reducing AI computing costs.

In 2025, Gradient Network completed a $10 million seed funding round , led by Pantera Capital and Multicoin Capital. The project is considered an important exploration in the DePIN × AI infrastructure track.

🔹 Based (February 2026)

Based is a Web3 super app that integrates transaction, payment, and social functions, and introduces an AI Agent as the main interaction method for on-chain operations, allowing users to automatically execute transactions and manage assets through AI.

In early 2026, Based completed a funding round of approximately $11.5 million , led by Pantera Capital, with participation from Coinbase Ventures and other institutions.

5️⃣ 1kx: Betting on Agents in the Internet Age

Founded in 2018 and headquartered in Berlin, 1kx is an early supporter of projects such as Lido, Arweave, and Gitcoin, and has established a significant influence in the DeFi and decentralized infrastructure field.

1kx's core judgment is that the Internet is entering the "Agent Internet" era, where a large number of AI agents will represent users to perform tasks, transactions, and collaborations, and Web3 infrastructure is the key support layer for this transformation.

1kx's recent representative investments

🔹 Olas (February 2025)

Olas (formerly Autonolas) is a decentralized AI Agent network that allows developers to create and deploy autonomous AI agents and enable multiple agents to collaborate on tasks through on-chain incentive mechanisms.

In February 2025, Olas completed a $13.8 million funding round led by 1kx. The project plans to launch Pearl , an AI Agent application store that will allow users to own and control their own AI agents on the blockchain for use in scenarios such as automated trading and social media operations.

🔹 Camp Network (April 2025)

As generative AI models increasingly use internet content for training, copyright disputes between content creators and AI companies are on the rise. Camp Network is dedicated to building an on-chain storage and licensing platform for content creators, exploring new business models for entertainment and IP assets in the AI ​​era.

The project completed a $25 million Series A funding round in 2025, co-led by 1kx and Blockchain Capital.

6️⃣ YZi Labs: Investing in AI Applications and Product Innovation

YZi Labs, formerly known as Binance Labs, officially separated from the Binance brand in 2025 and clearly identified Web3, AI, and biotechnology as its three new major investment directions.

In October 2025, YZi Labs announced the launch of a BNB Builder Fund of approximately $1 billion to support emerging projects including AI, RWA, DeFi, and infrastructure.

Compared to some crypto VCs that focus on underlying technologies, YZi Labs' AI investment strategy is more application-oriented.

Recent Investment Cases by YZi Labs AI

🔹 VideoTutor (October 2025)

VideoTutor is an educational AI agent for K-12 education that can automatically generate animated instructional videos from user-submitted questions and explain complex concepts through voice and visualization. Its founder is Kai Zhao, a 20-year-old Chinese university student.

In October 2025, YZi Labs led an $11 million Seed funding round for the project . Within 10 days of its launch, the product attracted 20,000 users and generated 20,000 instructional videos .

🔹 USD.AI (August 2025)

In August 2025, YZi Labs announced a strategic investment in USD.AI. USD.AI is an AI infrastructure finance protocol that allows GPU or AI server operators to obtain loans by pledging hardware and issuing stablecoins associated with computing resources, thereby providing funding for the construction of AI computing power.

💡 Summary: Which AI sectors do crypto VCs favor?

From an overall trend perspective, the AI ​​investment sectors most favored by crypto VCs are currently concentrated in the following areas:

① Decentralized AI Infrastructure

This is the most favored track, with representative projects including Nous Research, Gradient Network, and Grass.

The core logic is that training and inference of AI models are extremely costly, while coordinating idle GPUs globally through blockchain incentive mechanisms could potentially create a lower-cost, more decentralized alternative.

② AI Agent Payment and Finance

Projects such as Catena Labs and Olas represent this main theme.

As AI agents begin to automate tasks and transactions, the need for autonomous identity, automated settlement, and on-chain payments becomes urgent. The slowness, high barriers to entry, and compliance requirements of traditional financial systems are extremely unfriendly to AI agents, creating a real infrastructure gap.

③ AI Identity and Trust Layer

Representative project: Billions Network.

In a network environment rife with AI-generated content and rampant bots, "proving you are human" is becoming a critical requirement. The combination of zero-knowledge proofs and on-chain identity mechanisms offers a solution for identity verification without revealing data.

④ AI × IP Copyright Confirmation

Representative project: Camp Network.

With the development of generative AI, the source and copyright of training data are becoming increasingly important, and blockchain provides a traceable and enforceable copyright registration and revenue sharing mechanism.

⑤ AI Application Layer

Some crypto venture capitalists have also directly bet on AI products for end users, such as Cursor and VideoTutor—not emphasizing Web3 attributes, but directly using AI to lower the service threshold and expand the scope of inclusiveness.

🚩 In conclusion

AI agents need to make payments autonomously, computing power needs to be decentralized and coordinated, identities need to be verified on the blockchain, and copyrights need to be traceable and verifiable—these requirements are not narratives created by Web3 itself, but rather infrastructure gaps that are inevitable consequences of AI development.

Crypto VCs haven't truly "abandoned" Web3. Their shift towards AI is a bet on its next explosive growth.