In a lively online debate, leading venture capitalists are divided over the potential of non-financial applications in the realms of Web3 and crypto. Chris Dixon, a managing partner at a16z crypto, ignited the discussion by suggesting that the challenges facing these applications stem from years of scams, exploitative practices, and unclear regulations. Dixon argues that these issues have hindered the growth of non-financial use cases, which include decentralized social media, digital identity management, and Web3 gaming platforms.
Haseeb Quereshi, a managing partner at Dragonfly, countered Dixon’s perspective, stating that the failure of non-financial crypto applications is due to a fundamental lack of interest and market viability. Quereshi contends, "Let's just admit it. They were bad products. They failed the market test. It was not regulatory figures or prominent industry failures that caused these things to fail; it was that no one wanted any of it. Pretending otherwise is coping."
Dixon maintains optimism, highlighting that a16z crypto operates with a long-term vision, suggesting that emerging industries take time to develop. He points out that the top crypto applications by fee generation are primarily financial. Nic Carter, founding partner of Castle Island Ventures, emphasized the necessity for venture capitalists to identify market successes within typical fund deployment periods of 2-3 years.
This debate comes amidst a significant influx of venture capital into crypto projects in 2025, primarily directed towards tokenized real-world assets (RWAs), which represent traditional assets on blockchain networks.
Dragonfly’s investment strategy focuses on financial applications and blockchain infrastructure aimed at facilitating value and risk management within the on-chain financial ecosystem. Their portfolio includes the Agora stablecoin platform, payments infrastructure provider Rain, synthetic dollar issuer Ethena, and the Monad layer-1 blockchain.
Meanwhile, a16z’s crypto investments span both financial and diverse Web3 sectors, featuring platforms like Coinbase and Uniswap, alongside initiatives in community building, gaming, and media streaming. Notable projects include Friends With Benefits, a digital identity provider World, and Yield Guild Games, a Web3 gaming platform.
As the debate continues, the future of non-financial applications in crypto remains a contentious topic, with differing views on their potential and the timeline for their success.