a16z: Why launch Crypto Fund 5?

Authors: Chris Dixon, Ali Yahya, Guy Wuollet, Eddy Lazzarin; Source: a16z; Compiled by: Shaw, Jinse Finance

Crypto market cycles often follow fixed patterns. A wave of speculative frenzy attracts widespread attention and a large influx of capital. Some of this capital is wasted, while the rest is invested in the underlying infrastructure construction that would be impossible without the hype. When the noise fades, what remains often appears to have more practical value than at the peak of the market, and is more resilient and enduring than at the market trough.

Beyond the superficial price movements, the same pattern can be seen in each cycle: what has actually been built and implemented, and what people continue to use after the hype has subsided.

We are currently in a quiet moment after the clamor has subsided, and the industry signals emerging at this moment are among the most exciting in recent years. Stablecoins are the most direct evidence of this. Crypto market trading volume fluctuates with market conditions, but even in a bear market, the actual usage of stablecoins continues to climb. People use stablecoins for savings, cross-border transfers, and daily payments, which highlights how slow, expensive, and unreliable traditional alternatives are. The growth of stablecoins has long since shed its speculative nature and is more like a pure popularization of the internet ecosystem: the compounding growth stems from the practical value of the technology itself, rather than speculative expectations regarding price fluctuations. Blockchain is also proving its value in the capital market. Since the last cycle, the industry has achieved substantial growth: perpetual contracts have improved price discovery mechanisms, prediction markets have helped to solidify factual information, and on-chain lending has supported the stablecoin credit market. Traditional assets are gradually being put on-chain, and the service targets of on-chain finance are no longer limited to public chain native tokens. A completely new financial system is taking shape: operating 24/7, with near-instant settlement, near-zero cost, and accessible to anyone with an internet connection. The regulatory landscape is also moving in a positive direction. The GENIUS Act is a prime example of rational regulatory policy: clear definitions, robust protection mechanisms, and room for innovation by developers. We anticipate further regulatory progress in the crypto industry through legislation and rule-making. This will protect ordinary users, provide clear expectations for entrepreneurs, and pave the way for traditional mainstream institutions to enter the market. Let's take a moment to consider: Why is this moment particularly crucial? Software systems are becoming increasingly complex, and trust costs are rising continuously; AI capabilities are powerful but largely opaque and unregulated; and the monopolistic concentration of the internet's underlying infrastructure has reached an all-time high. In this environment, the inherent core characteristics of encrypted networks will only become more valuable, not diminish: a transparent and verifiable system; an inherently global network; an economic model that aligns the interests of users, creators, developers, and operators; and a decentralized infrastructure that does not rely on a few intermediaries. These characteristics have already been implemented in real-world products: payments, financial services, creator platforms, decentralized infrastructure, and new collaborative interaction models between humans and intelligent agents. Many of these innovations are spearheaded by startups and are also widely adopted by financial institutions and technology companies to provide faster, cheaper, and more reliable services. In practical applications, this means: **global, second-level transfers; holding USD assets without a bank; frictionless global circulation of assets through tokenization; access to composable networks for secondary development by others; and embedding these capabilities into various application scenarios.** It also fosters entirely new models previously impossible: **users can directly control their assets and identity, possessing inviolable digital property rights; a large number of AI agents can represent users in autonomous decision-making, actions, and transactions, and call upon computing power, data, and various services on demand; and an increasing number of autonomous networks can automatically complete financing, governance, and ecosystem iteration through code.** Therefore, we are officially announcing the launch of Crypto Fund 5, tailor-made for this era. We will use this $2.2 billion fund to support a group of entrepreneurs who will focus on sectors that receive little attention during their growth cycle but are most likely to accumulate long-term value: refining entirely new infrastructure into mature products that are usable by ordinary people in their daily lives. All influential computing platforms have ultimately established themselves through this path, and the crypto industry will undoubtedly follow suit.