Are Non-Financial Blockchain Use Cases Dead?

Prominent crypto venture capitalists are locked in a public dispute over whether non-financial use cases in crypto, Web3, and blockchain have stalled due to scarce investor demand and weak product-market fit, or if the best days for these applications—ranging from decentralized social media to digital identity and Web3 gaming—are still ahead. The quarrel began when Chris Dixon, a managing partner at a16z crypto, published an article on Friday arguing that years of scams, regulatory headwinds, and extractive practices have hindered adoption of non-financial use cases. He contends that these obstacles—and not a fundamental lack of interest—have held back breakthroughs in areas like decentralized social platforms, identity management, and onchain content streaming. The piece added a data point that underpins the debate: more than $60.7 million in fees were paid to crypto exchanges and DeFi applications in the last 24 hours, according to DeFiLlama, illustrating how the debate sits atop real market activity.

Key takeaways

• Public disagreement between a16z crypto and Dragonfly over whether non-financial crypto use cases failed due to demand or due to product-market mismatch, with each side citing different experiences and timelines.
• The debate foregrounds a core VC tension: patient, multi-year bets on new infrastructure and markets versus the need to demonstrate market traction within a typical 2–3 year fund cycle.
• DeFiLlama data shows that the most lucrative revenue streams currently come from financial use cases, underscoring a concrete misalignment between investor enthusiasm for non-financial use cases and where the fee revenue actually accrues.
• VC funding in 2025 surged, with a notable tilt toward tokenized real-world assets (RWAs), signaling a shift in focus that could redefine which on-chain innovations attract capital.
• Portfolio positioning differs markedly between the two firms: Dragonfly’s bets emphasize financial primitives and onchain value transfer, while a16z’s crypto arm spans broader Web3 sectors, including gaming, media, and community-building.

Sentiment: Neutral

Market context: The debate emerges as the crypto venture environment shifts toward RWAs and onchain financial architectures, even as activity in non-financial use cases remains mixed amid regulatory scrutiny and macro liquidity considerations.

Why it matters

The exchange highlights a fundamental question facing the crypto ecosystem: can non-financial use cases—such as decentralized social networks, digital identity solutions, and Web3 gaming—achieve sustainable adoption without a parallel surge in consumer demand and robust product-market fit? The argument for patience rests on the belief that new markets require time to mature, network effects to accrue, and users to migrate from legacy platforms to on-chain alternatives. Dixon’s stance reflects a long-horizon venture philosophy that treats crypto infrastructure and ecosystem-building as gradual, capital-intensive endeavors whose payoff is realized over a decade or more.

By contrast, Quereshi’s counterpoint is explicit: the market tests failed, and those failures aren’t merely the result of external shocks from policy makers or high-profile collapses. In his view, the simplest truth is that the products did not meet user needs, and pretending otherwise is a coping mechanism. This framing injects a sense of urgency into the debate, emphasizing that investors cannot rely on luck or timing to vindicate speculative bets; they must back products with demonstrable demand and meaningful utility within the typical funding cycle.

The tug-of-war plays out against a backdrop where the majority of fee-generating activity—while still anchored in DeFi—leans financial. A DeFiLlama visual caption accompanying the discussion notes that the top 10 on-chain applications by fees and revenue are all financial in nature. That reality complicates the narrative around non-financial utility, even as the broader crypto community keeps building toward new forms of ownership and governance that could eventually unlock demand for non-financial use cases at scale.

What to watch next

• Regulatory clarity and policy direction around non-financial crypto applications, including social media, identity, and content governance, could alter the risk-reward calculus for long-horizon bets.
• Progress in tokenized real-world assets (RWAs) and related on-chain infrastructure remains a central driver of VC interest; observe funding trends and notable exits or milestones in 2026.
• Updates on the two firms’ portfolio milestones—Dragonfly’s investments in stablecoins, payments infrastructure, and on-chain governance tools, and a16z’s broader Web3 bets in community platforms, gaming, and media—may signal shifts in where capital believes value will accrue.
• Specific projects cited in the debate, such as the Agora stablecoin, Rain’s payments infrastructure, Ethena’s synthetic dollar, Monad’s layer-1 ecosystem, and community platforms like Friends With Benefits and Yield Guild Games, could reveal early signs of product-market fit in non-financial areas.

Sources & verification

• Chris Dixon’s X article: https://x.com/cdixon/status/2019837259575607401
• Haseeb Quereshi’s response on X: https://x.com/hosseeb/status/2020451853633511696
• DeFiLlama data on activity and fees: https://defillama.com/
• Cointelegraph Research: crypto VC funding doubled in 2025 as RWA tokenization took the lead: https://cointelegraph.com/research/crypto-vc-funding-doubled-in-2025-as-rwa-tokenization-took-the-lead
• Cointelegraph explainer on RWAs and why they’re gaining attention: https://cointelegraph.com/learn/articles/why-everyone-in-crypto-is-suddenly-talking-about-rwas-in-2025

Industry debate and key details

Debate on non-financial use cases centers on two divergent philosophies about how crypto ecosystems evolve. On one side, Dixon argues that patient capital is essential to nurture new industries that will take time to develop; the onus is on founders to deliver credible, scalable platforms that can support long-term network effects. He stresses that a16z’s funds operate with at least a decade-long horizon, underscoring that “building new industries takes time.”

On the other side, Quereshi insists that a market-driven approach must take precedence. He asserts that non-financial products failed the market test not because of external catalysts but because they were, in his view, poorly designed or misaligned with user expectations. His blunt assessment challenges the narrative that policy or macro shocks alone explain the slow pace of consumer adoption for decentralized social media, identity solutions, and Web3 entertainment.

The middle ground—articulated in several responses from participants—highlights the practical tension between product feasibility and market readiness. Nic Carter of Castle Island Ventures, for example, cautions against waiting for a theoretical “rightness” before investing. He argues that fund deployment cycles require making educated bets on markets that may prove correct or incorrect within a 2–3 year timeframe, a reality that pressures venture funds to balance risk and potential reward.

Amid the debate, the broader market narrative remains shaped by 2025’s VC dynamics. A surge of capital into crypto projects, particularly RWAs and tokenization schemes, reflects evolving investor appetites and regulatory expectations. While RWAs have attracted attention as a pragmatic pathway to bridging on-chain finance with real-world assets, the execution of non-financial use cases is still in early stages. The DeFiLlama data cited in the discussion illustrates that the most valuable revenue streams today are financial applications, which may inform how new non-financial platforms design sustainable monetization strategies to compete for user attention and retention.

What it means for users, builders, and the market

The exchange of ideas among prominent VC figures matters because it frames how capital allocators evaluate risk, time horizons, and the potential for on-chain ecosystems to reach mainstream adoption. For builders, the debate signals that a viable path to success may require a dual strategy: advancing robust financial primitives that can support a wider ecosystem, while simultaneously delivering non-financial experiences with tangible user value, clear governance mechanisms, and superior UX compared with traditional platforms.

For investors, the dialogue reinforces the importance of due diligence around product-market fit, not just technology credentials. It also highlights the real-world testing ground for non-financial use cases: today’s most successful on-chain applications may still be anchored in finance, but the long-term impact could be measured by the extent to which communities adopt decentralized social, identity, and media platforms. As regulatory environments evolve and macro conditions shift, the trajectory of these projects will be shaped by whether teams can demonstrate repeatable user engagement and meaningful economic activity beyond speculative trading and token launches.

What to watch next

• Regulatory developments affecting non-financial crypto use cases and consumer-facing Web3 applications.
• Milestones in RWAs tokenization and related infrastructure that could redirect VC focus toward more tangible on-chain assets.
• Progress in notable non-financial projects within Dragonfly’s and a16z’s portfolios, including stability, user growth, and governance outcomes.
• Early product wins from decentralized social platforms, digital identity solutions, and Web3 gaming that demonstrate real consumer demand.

Sources & verification

• Chris Dixon’s article on X: https://x.com/cdixon/status/2019837259575607401
• Haseeb Quereshi’s response on X: https://x.com/hosseeb/status/2020451853633511696
• DeFiLlama data: https://defillama.com/
• Cointelegraph Research: crypto VC funding doubled in 2025 as RWA tokenization took the lead: https://cointelegraph.com/research/crypto-vc-funding-doubled-in-2025-as-rwa-tokenization-took-the-lead
• Cointelegraph explainer on RWAs: https://cointelegraph.com/learn/articles/why-everyone-in-crypto-is-suddenly-talking-about-rwas-in-2025

Industry debate and key details