Skip to main content

Paradigm's Quiet Transformation: What Crypto's Most Influential VC Is Really Betting On

· 10 min read
Dora Noda
Dora Noda
Software Engineer

In May 2023, something strange happened on Paradigm's website. The homepage quietly removed any mention of "Web3" or "crypto," replacing it with the anodyne phrase "research-driven technology." The crypto community noticed. And they weren't happy.

Three years later, the story has taken unexpected turns. Co-founder Fred Ehrsam stepped down from managing partner to pursue brain-computer interfaces. Matt Huang, the remaining co-founder, is now splitting time as CEO of Stripe's new blockchain Tempo. And Paradigm itself has emerged from a period of relative quiet with a portfolio that tells a fascinating story about where crypto's smartest money thinks the industry is actually heading.

With $12.7 billion in assets under management and a track record that includes Uniswap, Flashbots, and the $225 million Monad bet, Paradigm's moves ripple through the entire crypto VC ecosystem. Understanding what they're doing—and not doing—offers a window into what 2026 funding might actually look like.

The AI Controversy and What It Revealed​

The 2023 website change wasn't random. It came in the aftermath of Paradigm's most painful moment: watching their $278 million investment in FTX get written down to zero after Sam Bankman-Fried's empire collapsed in November 2022.

The ensuing crypto winter forced a reckoning. Paradigm's public flirtation with AI—scrubbing crypto references from their homepage, making general "research-driven technology" noises—drew sharp criticism from crypto entrepreneurs and even their own limited partners. Matt Huang eventually clarified on Twitter that the firm would continue crypto investing while exploring AI intersections.

But the damage was real. The incident exposed a tension at the heart of crypto venture capital: how do you maintain conviction through bear markets when your LPs and portfolio companies are watching your every move?

The answer, it turns out, was to go quiet and let the investments speak.

The Portfolio That Tells the Real Story​

Paradigm's golden era ran from 2019 to 2021. During this period, they established their brand identity: technical infrastructure, Ethereum core ecosystem, long-termism. The investments from that era—Uniswap, Optimism, Lido, Flashbots—weren't just successful; they defined what "Paradigm-style" investing meant.

Then came the bear market silence. And then, in 2024-2025, a clear pattern emerged.

The $850 Million Third Fund (2024)​

Paradigm closed an $850 million fund in 2024—significantly smaller than their $2.5 billion 2021 fund, but still substantial for a crypto-focused firm in a bear market. The reduced size signaled pragmatism: fewer moonshots, more concentrated bets.

The AI-Crypto Intersection Bet​

In April 2025, Paradigm led a $50 million Series A for Nous Research, a decentralized AI startup building open-source language models on Solana. The round valued Nous at $1 billion in tokens—Paradigm's largest AI bet to date.

This wasn't random AI investing. Nous represents exactly the kind of intersection Paradigm had been hinting at: AI infrastructure with genuine crypto native properties. Their flagship model Hermes 3 has over 50 million downloads and powers agents across platforms like X, Telegram, and gaming environments.

The investment makes sense through a Paradigm lens: just as Flashbots became essential MEV infrastructure for Ethereum, Nous could become essential AI infrastructure for crypto applications.

The Stablecoin Infrastructure Play​

In July 2025, Paradigm led a $50 million Series A for Agora, a stablecoin company co-founded by Nick van Eck (son of the prominent investment management CEO). Stablecoins processed $9 trillion in payments in 2025—an 87% increase from 2024—making them one of crypto's clearest product-market fit stories.

This fits Paradigm's historical pattern: backing infrastructure that becomes essential to how the ecosystem operates.

The Monad Ecosystem Build-Out​

Paradigm's 2024 $225 million investment in Monad Labs—a layer 1 blockchain challenging Solana and Ethereum—was their biggest single bet of the cycle. But the real signal came in 2025 when they led an $11.6 million Series A for Kuru Labs, a DeFi startup building specifically on Monad.

This "invest in the chain, then invest in the ecosystem" pattern mirrors their earlier Ethereum strategy with Uniswap and Optimism. It suggests Paradigm sees Monad as a long-term infrastructure play worth cultivating, not just a one-off investment.

The Leadership Shift and What It Means​

The most significant change at Paradigm isn't an investment—it's the evolution of its leadership structure.

Fred Ehrsam's Quiet Exit​

In October 2023, Ehrsam stepped down from managing partner to general partner, citing a desire to focus on scientific interests. By 2024, he had incorporated Nudge, a neurotechnology startup focused on non-invasive brain-computer interfaces.

Ehrsam's departure from day-to-day operations removed one of the firm's two founding personalities. While he remains involved as a GP, the practical effect is that Paradigm is now primarily Matt Huang's firm.

Matt Huang's Dual Role​

The bigger structural change came in August 2025 when Huang was announced as CEO of Stripe's new blockchain Tempo. Huang will stay in his role at Paradigm while leading Tempo—a layer 1 blockchain specializing in payments that will be compatible with Ethereum but not built on top of it.

This arrangement is unusual in venture capital. Managing partners typically don't run portfolio companies (or in this case, companies launched by their board affiliations). The fact that Huang is doing both suggests either extraordinary confidence in Paradigm's team infrastructure, or a fundamental shift in how the firm operates.

For crypto founders, the implication is worth noting: when you pitch Paradigm, you're increasingly pitching a team, not the founders.

What This Means for 2026 Crypto Funding​

Paradigm's moves offer a preview of broader trends shaping crypto venture capital in 2026.

Concentration Is the New Normal​

Crypto VC funding surged 433% in 2025 to $49.75 billion, but this masks a brutal reality: deal count fell roughly 60% year over year, from about 2,900 transactions to 1,200. The money is flowing to fewer companies at larger check sizes.

Traditional venture investment in crypto reached about $18.9 billion in 2025, up from $13.8 billion in 2024. But much of the headline $49.75 billion figure came from digital asset treasury (DAT) companies—institutional vehicles for crypto exposure, not startup investments.

Paradigm's smaller 2024 fund size and concentrated betting pattern anticipated this shift. They're making fewer, bigger bets rather than spreading across dozens of seed rounds.

Infrastructure Over Applications​

Looking at Paradigm's 2024-2025 investments—Nous Research (AI infrastructure), Agora (stablecoin infrastructure), Monad (L1 infrastructure), Kuru Labs (DeFi infrastructure on Monad)—a clear theme emerges: they're betting on infrastructure layers, not consumer applications.

This aligns with broader VC sentiment. According to top VCs surveyed by The Block, stablecoins and payments emerged as the strongest and most consistent theme across firms heading into 2026. The returns are increasingly coming from "picks and shovels" rather than consumer-facing applications.

The Regulatory Unlock​

Hoolie Tejwani, head of Coinbase Ventures (the most active crypto investor with 87 deals in 2025), noted that clearer market structure rules in the U.S. following the GENIUS Act will be "the next major unlock for startups."

Paradigm's investment pattern suggests they've been positioning for this moment. Their infrastructure bets become significantly more valuable when regulatory clarity enables institutional adoption. A company like Agora, building stablecoin infrastructure, benefits directly from the regulatory framework the GENIUS Act provides.

Early-Stage Remains Challenging​

Despite the optimistic macro signals, most crypto investors expect early-stage funding to improve only modestly in 2026. Boris Revsin of Tribe Capital expects a rebound in both deal count and capital deployed, but "nothing close to the 2021–early 2022 peak."

Rob Hadick of Dragonfly noted a structural issue: many crypto venture firms are nearing the end of their runway from prior funds and have struggled to raise new capital. This suggests the funding environment will remain bifurcated—lots of capital for established firms like Paradigm, much less for emerging managers.

The Paradigm Playbook for 2026​

Reading Paradigm's recent moves, a coherent strategy emerges:

1. Infrastructure over speculation. Every major 2024-2025 investment targets infrastructure—whether that's AI infrastructure (Nous), payment infrastructure (Agora), or blockchain infrastructure (Monad).

2. Ecosystem cultivation. The Monad investment followed by the Kuru Labs investment shows Paradigm still believes in their old playbook: back the chain, then build the ecosystem.

3. AI-crypto intersection, not pure AI. The Nous investment isn't a departure from crypto; it's a bet on AI infrastructure with crypto-native properties. The distinction matters.

4. Regulatory positioning. The stablecoin infrastructure bet makes sense precisely because regulatory clarity creates opportunities for compliant players.

5. Smaller fund, concentrated bets. The $850 million third fund is smaller than prior vintage, enabling more disciplined deployment.

What Founders Should Know​

For founders seeking Paradigm capital in 2026, the pattern is clear:

Build infrastructure. Paradigm's recent investments are almost exclusively infrastructure plays. If you're building a consumer application, you're likely not their target.

Have a clear technical moat. Paradigm's "research-driven" positioning isn't just marketing. They've consistently backed projects with genuine technical differentiation—Flashbots' MEV infrastructure, Monad's parallel execution, Nous's open-source AI models.

Think multi-year. Paradigm's style involves deep involvement in project incubation over years, not quick flips. If you want a passive investor, look elsewhere.

Understand the team structure. With Huang splitting time at Tempo and Ehrsam focused on neurotechnology, the day-to-day investment team matters more than ever. Know who you're actually pitching.

Conclusion: The Quiet Confidence​

The 2023 website controversy seems almost quaint now. Paradigm didn't abandon crypto—they repositioned for a more mature market.

Their recent moves suggest a firm that's betting on crypto infrastructure becoming essential plumbing for the broader financial system, not a speculative playground for retail traders. The AI investments are crypto-native; the stablecoin investments target institutional adoption; the L1 investments build ecosystems rather than chase hype.

Whether this thesis plays out remains to be seen. But for anyone trying to understand where crypto venture capital is heading in 2026, Paradigm's quiet transformation offers the clearest signal available.

The silence was never about leaving crypto. It was about waiting for the right moment to double down.

References​

Share on Twitter