Current Trends in DeFi and Crypto Investments
In recent months, investments in decentralized finance (DeFi) have hit a plateau. However, this hasn’t deterred crypto venture capitalists, who remain active and enthusiastic, identifying three primary areas of investment interest.
DeFi’s Divergence from Bitcoin’s Surge
When Bitcoin’s value skyrocketed to over $100,000 in December, DeFi did not follow suit as it has historically. The anticipated boom fell short, and as enthusiasm diminished, many popular DeFi tokens saw their values plunge by over 70% from their peak.
Despite this downturn, venture capitalists from various firms expressed optimism about the sector’s potential for growth. Gleb Dudka, a principal at Greenfield Capital, highlighted the increasing attractiveness of liquid opportunities in light of recent price drops. Greenfield is keen on expanding its portfolio with both liquid and private investments.
Currently, the total value locked in DeFi protocols—a rough indicator of investor interest—stands at approximately $118 billion, reflecting a 38% decline from its peak four years ago. As DeFi deposits dwindle, venture capital investments have also slowed. While venture firms invested a record $36 billion in crypto in 2021, that figure plummeted to $9.5 billion in 2024, marking a 73% decrease.
Key Investment Areas in DeFi
Venture capitalists have identified three promising trends within the DeFi space worth investing in.
The MEV Opportunity
Maximal Extractable Value (MEV) represents a significant opportunity within blockchain technology, involving sophisticated trading bots that engage in arbitrage by reorganizing on-chain trades for maximum profit. While these bots help maintain accurate asset prices on decentralized exchanges, they can also negatively impact traders through tactics like sandwich attacks.
The MEV market is substantial. A 2025 report by the European Banking Authority and the European Securities and Markets Authority revealed that MEV bots have generated profits of up to $3 billion on Ethereum since 2020. Dudka noted that DeFi protocols that manage their transaction supply chain could reclaim profits currently captured by bots, thus protecting users from adverse MEV effects.
‘Convergence’ Investments
Another area of interest is the convergence between traditional finance and DeFi. CoinFund’s Chief Investment Officer, Alex Felix, refers to these as “convergence bets.” Felix explained that CoinFund is exploring opportunities with both institutional and retail angles, believing that DeFi growth hinges on expanding product accessibility and liquidity for a broader investor base, including institutions.
Several protocols are already working towards this goal. Aave, a leading DeFi lender, has introduced an initiative named Horizon, targeting sophisticated investors. Similarly, Lido, an Ethereum liquid staking protocol, is developing bespoke products to attract institutional players.
Decentralized Derivatives
Perpetual futures, a type of futures contract without an expiration date, have become a popular method for speculating on crypto price movements. Hyperliquid, a perpetual futures platform, has emerged as a standout DeFi protocol, achieving a trade volume of $187 billion in February after launching in early 2023.
Tom Schmidt, a partner at Dragonfly, a crypto venture fund, believes this trend will continue to expand. He noted that decentralized perpetual futures exchanges offer several advantages over their centralized counterparts, including better pricing, increased flexibility, and greater transparency.
Dragonfly is investing in similar products that could further grow the market. Schmidt highlighted the diversification of products away from traditional desktop interfaces, noting the rise of prosumer terminals, Telegram bots, and mobile apps, which are gaining traction and reaching mainstream audiences.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
