Dragonfly Capital’s $650M Fund IV closed, and the timing could not be more contrarian. Crypto prices are grinding lower. Retail is quiet. And most venture capital firms are either downsizing or walking away entirely from blockchain. Yet here is Dragonfly, writing one of the largest checks in crypto VC history.
The San Francisco-based firm officially closed Fund IV on February 17, 2026, matching its predecessor’s $650 million size and surpassing its initial $500 million target by 30%. Managing partner Haseeb Qureshi put it plainly: “Spirits are low, fear is extreme, and the gloom of a bear market has set in.”
So why is Dragonfly doubling down?
What Dragonfly Capital’s $650M Fund Is Actually Betting On
The fund is not chasing the next meme coin wave. It is not hunting for speculative L1 launches or NFT platforms. Dragonfly’s thesis is far more grounded this time around.
The firm is directing capital into stablecoins, DeFi protocols, real-world assets (RWAs), prediction markets, and agentic payment infrastructure. General Partner Tom Schmidt called this the “biggest meta shift” he has seen in his time in the industry.
Qureshi did not mince words either: “Non-financial crypto has failed.” That declaration alone signals how dramatically the investment playbook has changed.
Recent portfolio wins back up the thesis. Dragonfly backed Polymarket before it became the go-to prediction market. It invested in Ethena, a synthetic dollar protocol that has grown into one of the most prominent stablecoin projects in the space. Rain, a stablecoin card issuer, is another name from its portfolio gaining real traction. These are not experiments. These are products with users and growing revenue.
Who Is Still Investing in Crypto
Dragonfly is not alone in pivoting toward financial infrastructure, but it is among the most vocal about it.
Crypto VC funding in 2025 reached $25 billion, a 160% increase over 2024. But the nature of that funding shifted hard. Deal sizes almost tripled on average, jumping from $11.7M to $31.5M. And payments? That category alone pulled in $1.88 billion, a 424% jump that nobody really saw coming a year ago. RWA funding skyrocketed 802% to $1.1 billion.
The “spray and pray” era is over. Top firms are writing bigger checks into fewer, more mature projects.
a16z crypto deployed $3.69 billion across 46 deals last year. Paradigm wrote $3.32 billion across just 26 rounds. Coinbase Ventures led in deal volume with 70 investments. The playbook looks almost identical across all these firms – stablecoins, payments, RWAs, DeFi. It is hard to miss the pattern.
Pantera had arguably the best year of the lot, notching four portfolio IPOs in 2025. Circle, Amber Group, Figure Technologies, and Gemini all went public, combining for roughly $33 billion in market cap. That is a serious scorecard.
Why Bear Markets Are Dragonfly’s Preferred Entry Point
Dragonfly has a pattern worth noticing. It raised Fund I during the 2018 ICO collapse. Fund III came together just before the Terra Luna crisis hit in 2022. Both turned out to be strong vintages.
General Partner Rob Hadick called the current environment a “mass extinction event” for crypto VC. Many smaller funds simply cannot raise. LPs are exhausted. But Dragonfly views exactly this moment as the opportunity, with less competition for deals and founders who are serious rather than opportunistic.
The firm has backed 162 companies over eight years, with 14 new investments in 2025 alone, including names like Avalanche, MegaETH, Pendle, Kaito, and Bitget.
What This Means for DeFi and RWA Builders
For founders building in DeFi or RWA tokenization, this is a meaningful signal. A $650 million war chest, focused specifically on financial infrastructure, means Dragonfly can write checks from seed through the growth stage.
On the watchlist: agentic payments, where AI systems handle their own on-chain transactions without human input, plus privacy infrastructure and the slow but steady tokenization of traditional assets like private credit and equities.
The numbers are hard to argue with. Stablecoin market cap is sitting at an all-time high. RWA TVL is at an all-time high. Prediction market volumes broke records in 2025. Everything Dragonfly is betting on is quietly growing, even as prices drift sideways.
What is Dragonfly Capital’s Fund IV focused on?
The $650 million fund targets DeFi protocols, stablecoins, real-world asset tokenization (RWAs), prediction markets, and AI-driven agentic payment infrastructure.
Why did Dragonfly raise during a bear market?
Go back to 2018, when the ICO bubble had just burst and crypto Twitter was in full meltdown mode. Dragonfly raised Fund I right then. It worked out well. The logic is simple enough, when everyone else is retreating, valuations drop, competition for deals thins out, and patient capital tends to win.
How does this compare to other crypto VC funds?
At $650 million, Fund IV places Dragonfly alongside a16z and Paradigm in terms of scale. It is one of the largest crypto-focused venture closes during the current market downturn.
What happened to speculative crypto investing?
According to Dragonfly and other top-tier VCs at Consensus Hong Kong 2026, the era of high-FDV token launches and hype-driven investing is over. The industry is consolidating around real utility, revenue, and financial infrastructure.
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Disclaimer:
Look, we’re just journalists reporting the news here, not your financial advisors. Everything you read above is for information purposes only. Crypto is wild, unpredictable, and can absolutely wreck your savings if you’re not careful. Never invest money you can’t afford to lose. Seriously, we mean it. Do your own research, talk to actual licensed financial professionals, and remember that past performance means absolutely nothing when it comes to future results. The crypto market can turn on a dime, and what’s hot today might be toast tomorrow. We’re not responsible for your investment decisions, good or bad. Trade smart, stay safe, and don’t bet the farm on anything you read on the internet, including this article.
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