Mar'26: AI is Eating Crypto's Lunch (For Now)

Gm! Welcome to the March Deal Flow Digest, including every crypto / web3 funding round we tracked last month, as well as ALL the deals, and the recent hackathon/demo day results (in the links).

Happy April Fools day to those who celebrate (don’t believe anything online today).

February was the biggest month in venture capital history. $189 billion deployed globally. Let that sink in for a second.

Now here’s the uncomfortable part: 83% of it went to three companies. OpenAI ($110B), Anthropic ($30B), and Waymo ($16B). Together, those three rounds totaled $156 billion… roughly a third of ALL global venture capital deployed across ALL of 2025 ($425B per Crunchbase). In a single month.

If you’re thinking it’s “All AI”... Yes, it is. AI-related startups captured 90% of February’s global venture funding: $171 billion. The remaining 10%, ~ $18B, was left for literally everything else. Every sector. Every geography. Every stage.

Looking at Crypto Venture fundraising we have $1B in February, $3B in March ($1.6B of that to Kalshi / Polymarket). The gap in capital gravity is hard to ignore.

Per Messari’s fundraising overview, crypto VC funding (capital raised) rose ~23% year-over-year through March 2026, but the number of deals fell ~46%... bigger checks to fewer companies, with the average round climbing ~220% to $34.7M. Active crypto investors declined ~35% to 3,122. Capital is concentrating everywhere, but the magnitude of concentration in AI is on a completely different level.

This isn’t a “crypto is dead” story.

Crypto has had some strong weeks, e.g. the week of March 16 tracked $1.2B raised across 18 projects (though that was heavily skewed by Kalshi’s $1B round and the Mastercard/BVNK $1.8B acquisition announcement). And February’s crypto funding hit ~$1B, with just three deals accounting for 44% of the total.

Sound familiar? That’s the same concentration dynamic playing out in AI, just at a different scale.

A few things :

1. The denominator changed. When three companies raise $156B in a month, the “percentage of VC going to crypto” metric looks catastrophic even if absolute crypto funding is stable or growing. It’s worth asking whether the right comparison is crypto vs. AI, or crypto vs. everything-that-isn’t-AI. Because everything else got squeezed too. Per Crunchbase, seed-stage funding across all sectors actually fell about 11% year-over-year in February, even as mega-rounds pushed the headline total to an all-time record.

2. AI funding isn’t really a “venture” funding round anymore. OpenAI’s $110B round came from Amazon ($50B), Nvidia ($30B), and SoftBank ($30B). Noteworthy is that only $15B of Amazon’s commitment arrived as upfront cash, with the remaining $35B contingent on conditions that reportedly include either achieving AGI or completing an IPO. Meanwhile, OpenAI committed to spend $100B on AWS over the next eight years. Many have pointed out the circular nature here…Amazon invests in OpenAI, OpenAI commits to spend multiples of that on Amazon’s cloud. Seems more like strategic infra investment v. VC. Strip out the three mega-rounds and February was a pretty ordinary month globally.

3. Crypto’s real problem isn’t AI: it’s exit velocity. The VCs I’m talking to aren’t avoiding crypto because they love AI more. They’re hesitant because crypto exit timelines are unpredictable, token liquidity is a double-edged sword, and DPI is still the metric that LPs care about most. AI startups, even relatively early ones, can point to ARR growing 3-5x annually. Anthropic went from $1 billion in annualized revenue in December 2024 to $9 billion by end of 2025 to $19 billion by early March 2026. There is simply no precedent for that growth rate in enterprise software. Insane.

At YC W26 Demo Day this month (March 24), Garry Tan shared that 14 companies hit $1M ARR by Demo Day.. the highest count ever, out of roughly 200 startups in the batch. That’s about 7% of the batch, and the average weekly revenue growth rate across the whole set was 14%. This batch was 64% B2B, only ~5% consumer, and skewed heavily toward infrastructure and hard technical problems. That’s the competitive bar crypto founders are being measured against, whether we like it or not.

4. The overlap is growing (and it’s interesting). YC announced they’ll offer USDC funding to ANY startup (not just crypto-native ones) across Ethereum, Base, and Solana, starting with the Spring 2026 batch. Mastercard acquired stablecoin infrastructure provider BVNK for up to $1.8B. Stablecoins are becoming the rails that AI companies run on. The “AI vs. Crypto” framing might be the wrong frame entirely, maybe it’s: which crypto companies are well-positioned to serve the AI capital stack?

If you are a crypto founder raising today, you are no longer competing only with other crypto startups. You are competing with AI companies that can show real revenue, visible (oftentimes, parabolic) growth, and a much clearer path to scale…. That investor across the table just watched an AI company go from $0 to $19B annualized revenue in under three years.

“We are building the future of finance” is not enough anymore.

The crypto companies most likely to attract capital in this environment will look more like actual businesses: revenue, retention, distribution, and a crisp answer to why being on-chain matters (beyond “decentralization”). The era of “we will figure out the business model after the token launch” is over.

For crypto VCs, the playbook has not changed, but the urgency has. Fund managers need to show LPs that crypto can generate DPI, not just TVPI. There are real positive signals: M&A is active (Just in March: Mastercard/BVNK, Polymarket/Brahma, GSR acquiring Autonomous and Architech), stablecoins are powering real businesses, and there is finally more evidence of durable revenue in parts of the stack. But the window to prove that thesis narrows when AI is absorbing this much capital and attention.

Here’s the thing that gets lost in the doom-scrolling: $189B going to three AI companies might actually be good for crypto. Why?

• These AI companies need payment rails. They need to move billions internationally, instantly, cheaply. Stablecoins do that. YC’s USDC move is a signal, not an anomaly.

• The AI capital cycle creates wealth. When Anthropic employees and OpenAI shareholders diversify, some of that capital flows into alternative assets: including crypto funds.

• AI is making crypto startups faster. The same “idea to product” compression I wrote about in January means crypto teams can ship in weeks what used to take quarters. That does not fix product-market fit, but it does raise the ceiling for what small, sharp teams can build. If you’re a crypto founder with real domain expertise and you’re not using AI to 10x your output, you’re already behind.

The question isn’t whether AI is eating crypto’s lunch. It is (right now). But it’s also eating every other category’s lunch. I’m more interested in if crypto founders and investors can adapt to a world where revenue velocity is the new table stakes, and where “protocol” is less compelling to investor than “a real company that happens to use crypto rails.”

I’m still cautiously optimistic.

Kalshi | Series E | Prediction Market | $1,000,000,000 | 2026-03-19
Kalshi raised $1B in a Series E at a reported $22B valuation, doubling its December valuation. The prediction market platform reported $1.5B annualized revenue and weekly trading volumes exceeding $1B. Lead investor: Coatue Management.

Polymarket | Undisclosed | Prediction Market | $600,000,000 | 2026-03-27
Polymarket received a fresh $600M investment as part of a broader $1.6B total commitment. The decentralized information markets platform lets users trade on real-world outcomes. Lead investor: Intercontinental Exchange (ICE).

Core Scientific | Debt Financing | Infrastructure | $500,000,000 | 2026-03-23
Core Scientific secured an additional $500M commitment from J.P. Morgan, expanding its strategic financing facility to $1B under an accordion feature. The company operates Bitcoin mining and AI data center infrastructure. Lead investor: J.P. Morgan.

Metaplanet | Post-IPO Equity | Digital Assets | $255,000,000 | 2026-03-16
Metaplanet raised $255M through a share placement with warrants to accelerate its bitcoin treasury strategy, aiming toward a 210K BTC accumulation goal. Investors were not disclosed.

Eightco Holdings | Post-IPO | Infrastructure | $125,000,000 | 2026-03-12
Eightco Holdings secured $125M in institutional commitments to expand into AI and blockchain investments. The company disclosed holdings including 277M WLD tokens and 11K ETH. Lead investor: Bitmine.

Bluesky | Series B | Social | $100,000,000 | 2026-03-19
Bluesky disclosed a $100M Series B (raised in April 2025) as its user base grew from 13M to 43M. The company is building decentralized social media infrastructure. Lead investor: Bain Capital Crypto.

KAST | Series A | Payments | $80,000,000 | 2026-03-09
KAST raised $80M in a Series A to expand its stablecoin-powered cross-border payments platform. The company reported 1M+ users and roughly $5B annualized transaction volume, and is targeting a $100M revenue run rate in 2026. Lead investors: QED Investors and Left Lane Capital.

ARQ | Unknown | Payments | $70,000,000 | 2026-03-03
ARQ (formerly DolarApp) raised $70M to scale its stablecoin-based financial app for Latin America. The company reported 2M+ users and $10B+ annualized transaction volume. Lead investor: Sequoia Capital.

WorldWLD | OTC Transaction | Digital Assets | $65,000,000 | 2026-03-26
WorldWLD completed a $65M OTC token transaction tied to World (formerly Worldcoin). Investors were not disclosed.

Startale | Series A | Infrastructure | $50,000,000 | 2026-03-26
Startale raised $50M from SBI as part of a $63M Series A. The Japan-based blockchain company is building tokenized securities infrastructure and stablecoin rails. Lead investor: SBI Holdings.

Click to see all of March’s funding rounds here:

VCs are continuing to announce their new raises.

• a16z crypto Fund V targeting ~$2B | Mar 2026
  Andreessen Horowitz’s crypto arm was reported to be raising its fifth fund, targeting around $2 billion, with plans to close by the end of the first half of 2026.

• ParaFi new venture fund $125M | Mar 2026
  ParaFi raised $125 million in March for a new venture fund, with reporting noting a focus on areas like stablecoins, tokenization, and institutional onchain finance.

• 5c(c) Capital $35M | Mar 2026
  A new venture fund focused on prediction-market infrastructure is raising up to $35 million, backed by investors including the CEOs of Kalshi and Polymarket.

As a reminder, if you are interested in learning more about Bankless Ventures Fund II, please fill out this form and we will be in touch!

Upcoming

ETHGlobal Cannes 2026 | April 3–5
Cannes, France (in-person). $150k+ in prizes.

Hack The Block (Paris Blockchain Week) | April 11
Flagship Paris Blockchain Week Hackathon. Prizes to be announced.

ETHPrague Conference and Hackathon 2026 | May 8–10
Prague, Czech Republic (in-person). Three days of Ethereum talks, workshops, and hands-on hacking.

Ongoing

xStocks Hackathon EthCC: Market Open | March 31–April 2
Cannes, Provence-Alpes-Côte d’Azur (in-person). $75k in prizes.

Finished

MoveFWD Phase II (Alkimi x Sui) | Jan 27 – Mar 29, 2026
Online. Submission window ended March 29.

Polkadot Hub Hackathon 2026 | Feb 15 – Mar 24, 2026
Online. $30k prize pool for builders on Polkadot Hub.

Ordeflow 001 (Polymarket bot sprint) | Mar 22 – Mar 24, 2026
Online. 48-hour build sprint for Polymarket and on-chain trading bots.

Upcoming

RWA Demo Day Final Pitch Event | Apr 8, 2026
Online. Final pitch event with winners announced April 21 (to be showcased during Hong Kong Web3 Festival).

Helika × Avalanche Accelerator Demo Day | Mar 9, 2026
San Francisco, USA (in-person). Demo day for the Avalanche x Helika accelerator cohort.

Base Batches 003: Student Track | Open (apply by Apr 27, 2026)
Online. Student track for onchain builders; top teams flown to San Francisco for Demo Day.

Alliance ALL17 | Open (rolling; cohort starts May 11, 2026)
New York City + remote. Crypto & AI accelerator offering $500k to admitted startups (per program terms).

Zynaris Web3 Accelerator | Open (rolling admissions)
Online. Rolling admissions “perpetual challenge” format; the program markets a funding range for selected founders.

That’s a wrap for March!

Thank you and good luck out there.

Ben Lakoff, CFA
https://twitter.com/benlakoff