From DeFi to AI: Why Crypto Investors Are Expanding Their Thesis

Crypto venture capital is entering a new phase as investors increasingly look beyond traditional blockchain applications and toward the convergence of artificial intelligence, autonomous systems and digital asset infrastructure.

Paradigm, one of the most influential crypto-focused venture firms, has raised a $1.2 billion fund to invest across artificial intelligence, robotics, crypto and other emerging technologies. While blockchain remains central to the firm’s strategy, the new fund reflects a broader investment thesis: that the next wave of innovation may emerge from the intersection of AI and decentralized technologies.

The move highlights a growing trend among institutional investors and crypto-native firms that increasingly view blockchain not as a standalone sector, but as a potential infrastructure layer for autonomous systems, digital ownership and machine-driven financial activity.

Crypto VC Expands Beyond Traditional Blockchain Bets

Founded in 2018 by Matt Huang and Fred Ehrsam, Paradigm has become one of the largest venture investors in the digital asset sector.

The firm previously raised a $2.5 billion crypto fund in 2021 and an $850 million early-stage blockchain fund in 2024, focusing on companies building across crypto infrastructure, decentralized finance and Web3 applications.

Its latest fund represents an expansion of that approach rather than a shift away from crypto.

Paradigm said the fund will target opportunities across AI, robotics, autonomous hardware and other emerging technologies while continuing to invest in blockchain projects.

Its portfolio reflects this broader strategy. On the crypto side, the firm has backed projects including decentralized exchange Hyperliquid, prediction market platform Kalshi and stablecoin-focused blockchain Tempo. It has also invested in AI and deep-tech companies, including autonomous drone developer Zipline and AI company Nous Research.

The strategy suggests that investors increasingly see common challenges across AI and blockchain, including computation, verification, ownership and coordination.

AI Agents Create New Demand for Blockchain Infrastructure

One of the key drivers behind the convergence of AI and crypto is the rise of autonomous AI agents.

Unlike traditional applications, AI agents are designed to independently complete tasks, interact with digital services and potentially execute transactions with limited human involvement.

This creates new infrastructure requirements around digital identity, secure payments, machine-to-machine transactions, ownership verification, and programmable financial systems.

Blockchain networks and stablecoins are increasingly being explored as potential tools to support these interactions.

Companies including Coinbase and Stripe have been developing payment infrastructure aimed at enabling AI agents to use wallets, stablecoins and digital payment rails.

If AI agents become more widely adopted, blockchain-based systems could serve as the settlement layer that allows autonomous software to participate in digital economies.

Blockchains Are Preparing for an AI-Driven Economy

The shift toward AI-focused infrastructure is not limited to venture capital.

Blockchain networks are also adapting their strategies as developers explore AI-driven applications and automated financial activity.

BNB Chain, for example, has outlined a roadmap focused on improving blockchain capabilities for AI applications and high-frequency use cases. The development reflects a broader trend among networks seeking to build infrastructure capable of supporting more complex, automated digital interactions.

As AI systems become more capable, blockchain networks may increasingly compete on their ability to provide scalable, secure and programmable infrastructure for machine-driven transactions.

A New Investment Cycle for Crypto Infrastructure

Paradigm’s latest fund comes as crypto investment priorities continue to evolve.

Previous cycles were largely driven by exchanges, decentralized finance and consumer-focused applications. The emerging cycle is increasingly focused on infrastructure that supports institutional adoption and new digital economies.

Key areas attracting attention include: AI-powered financial systems, tokenized assets, decentralized computing, blockchain security, and autonomous agents.

This shift also aligns with broader institutional trends, including the growth of tokenization and digital asset infrastructure. As financial markets become increasingly programmable, the demand for systems that can support automated transactions and digital ownership is expected to grow.

The Next Blockchain Opportunity May Be Beyond Crypto

Paradigm’s $1.2 billion fund signals a changing perception of blockchain technology.

Rather than viewing AI and crypto as separate sectors, investors are increasingly exploring how they can complement each other: AI can provide automation and intelligence, while blockchain can provide verification, ownership and financial coordination.

For the crypto industry, the next major opportunity may not come from another trading application or token launch, but from becoming the infrastructure layer for autonomous digital economies.