Crypto VCs Divided: Can Non-Financial Web3 Apps Survive and Thrive?

What’s Sparking the Big Debate Among Crypto Investors?

Crypto venture capitalists are locked in a heated discussion. The main question? Do applications have a bright future? These apps include things like blockchain games, decentralized social networks, and digital identity tools. Some VCs say yes, they just need more time. Others say no, they’ve already failed.

This clash shows deep splits in the crypto world. Investors disagree on where blockchain tech should go next. Finance apps like DeFi have boomed. But what about everything else? Let’s break it down.

Chris Dixon’s Take: External Forces Hold Back

Chris Dixon, a top leader at a16z crypto, kicked off the debate. He wrote that apps faced tough roadblocks. Scams, bad actors, and strict rules scared off users and builders. Regulators cracked down hard. This slowed growth for apps outside money-making tools.

Dixon points to apps like:

• Decentralized social media, where users own their data.
• Digital identity systems for secure online proof.
• Blockchain games with true ownership of items.
• Media platforms on chains.

He believes blockchain can give users real control. No big tech middlemen. But outside problems stopped them from taking off.

Haseeb Qureshi Fires Back: It’s About Bad Products, Not Bad Luck

Not everyone agrees. Haseeb Qureshi from Dragonfly Capital hit back hard. He says these apps flopped because they’re not useful or fun. Users don’t want them. It’s not scams or rules—it’s poor design and no real need.

Qureshi calls it the “market test.” Many projects failed because they solved fake problems. People stick with easy apps from big companies. Why switch to clunky Web3 versions?

“These products failed because users found them neither useful nor attractive.”

This view pushes for focus on what works now: financial tools.

Why the Split? Investment Timelines Clash

The debate ties to how VCs think about time. A16z plays the long game. They expect 10+ years for big wins. New platforms need time to grow users and fix issues.

Others, like Nic Carter from Castle Island Ventures, say VCs can’t wait forever. Funds need returns in 2-3 years. Quick wins beat slow experiments.

This shapes bets:

• Long-term VCs back wild ideas like social networks or ID tools.
• Short-term ones chase proven demand, like finance.

Where’s the Money Flowing Now?

Crypto funding hit peaks in 2022. Now, it pours into (RWAs). Think real estate or bonds as blockchain tokens. These feel safe and familiar.

Dragonfly loves finance. Their portfolio has:

• Agora stablecoin for payments.
• Rain for payment infra.
• Ethena synthetic dollar.
• Monad blockchain.

A16z mixes it up. They back Coinbase, Uniswap, but also non-finance like Friends With Benefits (community), World (identity), and Yield Guild Games (gaming).

Success Stories and Big Fails in

Some non-finance apps shine. Axie Infinity made blockchain gaming huge, at least for a while. Users owned NFTs and earned tokens. Decentraland built virtual worlds.

But many crashed. Friend.tech hyped social tokens but faded. Most decentralized Twitter clones lack users. Why? Bad user experience (UX). Slow speeds. Complex wallets.

Blockchain adds power: ownership, no censorship, portability. A game item works across games. Social posts move platforms. But tech hurdles remain.

The Bull Case for

Optimists see huge potential. Centralized apps hoard data. Users hate ads and bans. Web3 fixes this:

• Privacy: Control your info.
• Ownership: Sell digital stuff anytime.
• Interoperability: No lock-in.

As tech improves—faster chains, easier wallets—adoption could surge. Layer-2 solutions like Optimism cut fees. Account abstraction hides keys.

The Bear Case: Stick to What Works

Pessimists say markets spoke. Finance wins because it saves money or earns yields. Games need fun first, blockchain second. Social needs viral hooks.

VC money dried up post-2022 crash. Survivors focus on revenue. Non-finance lacks clear paths to profit.

What’s Next for Crypto Innovation?

This clash isn’t just talk. It guides billions in funding. Long-term bets could birth the next Facebook on blockchain. Short-term focus builds stable finance rails.

Hybrid wins? Finance tools with social layers, like tokenized communities. Or gaming with real economies.

Watch projects like Farcaster (social), Lens Protocol (decentralized profiles), or Immutable X (gaming chain). They blend best of both.

Final Thoughts: Patience vs. Pragmatism

Crypto VCs are split on . Dixon bets on time and vision. Qureshi demands proof now. Both have points. Blockchain is young. Finance proved it works. Non-finance needs better products and luck.

For investors and builders: Balance both. Build useful apps. Ignore hype. The future might hold both financial empires and creative Web3 worlds.

Stay tuned. This debate will shape crypto’s next chapter.