Dragonfly Investor: Crypto is Penetrating Traditional Finance and AI
Elton, an investor at Dragonfly_xyz, stated that after transitioning from general VC to a crypto-native fund, he deeply agrees that advantages in venture capital are hard to find, and chasing new trends often leads to adverse selection.
Crypto is rapidly expanding beyond Crypto Twitter (CT) and delving into traditional financial services and AI. Institutions that can position themselves at the intersection will achieve significant returns.
In terms of market mechanisms, VCs and institutions are accelerating the allocation of resources to cross-sector projects due to the opportunities arising from the integration of crypto with traditional finance/AI. Under event-driven circumstances, funds are shifting from purely crypto or traditional VC to funds and companies with expertise in both fields. Crypto-native institutions like Dragonfly and cross-sector projects benefit, while single-sector funds face pressure.
Source: Public Information
ABAB AI Insight
Elton previously transitioned from general VC to Dragonfly, and this statement continues his observation of crypto's penetration from an independent track to the mainstream. He has emphasized multiple times the execution advantages of crypto-native teams in the intersection of traditional finance and AI.
In terms of capital pathways, Dragonfly mobilizes fund resources by focusing on cross-investments in crypto and traditional finance/AI, prioritizing stablecoins, RWA, and on-chain applications of AI agents. The motivation is to seize the window for crypto technology to penetrate traditional institutions, avoiding adverse selection from purely chasing trends, while amplifying the fund's network effects across multiple sectors.
Similar to a16z's strategic shift from pure crypto to crypto+AI and traditional finance, as well as several funds' layouts in RWA and on-chain AI in 2025-2026, Elton's current viewpoint indicates that crypto investment is in a transitional phase from internal circulation within CT to deep integration with traditional finance and AI.
Essentially, this represents a reconstruction of the industrial chain: crypto technology is reshaping traditional financial services and AI infrastructure into an open on-chain form. The mechanism lies in the technology's penetration, which lowers entry barriers and creates new cross-sector opportunities, forcing VC capital to shift from chasing single sectors to cross-field layouts, achieving a structural change from isolated crypto investments to mainstream fintech integration.