Empire Newsletter: Is crypto vs AI a zero-sum game?

One of the big mistakes that non-crypto VCs make is assuming that crypto can be treated as yet another vertical they can enter easily, Framework Ventures co-founder told Blockworks

article-image

Treecha/Shutterstock modified by Blockworks

share

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. Subscribe to the Empire newsletter.


Robot dollars

Ah, AI. 

It sometimes feels like the AI and crypto narratives are fighting each other for mainstream attention. 

I’m not saying it’s always the case, and there are clearly use cases for both — even together — but only if you’re familiar with the two spaces. 

“It seems trendy to frame crypto vs AI as a zero-sum competition. But we don’t buy it,” Paradigm co-founder Matt Huang tweeted last year.

Because we’re all crypto nerds here, I want to examine a certain part of what I like to refer to as “AI overload” — when everyone insists AI is about to change every single little thing, including venture capital. 

Let me back up for a second. Last week, Forbes reported that Point72 Ventures, the VC arm of Steve Cohen’s Point72 (not the hedge fund, mind you), plans to focus on AI, leading to layoffs on its FinTech team.

A source familiar with the firm confirmed the move to Blockworks, while also confirming that it’ll be pivoting away from crypto. 

I’m not trying to focus on Point72 Ventures, though, I’m just using the news as a convenient jumping-off point. Looking at Pitchbook data from last year, AI was a pretty hyped-up segment in comparison to crypto, which was left out in the cold. 

Galaxy data released earlier this week shows that second-quarter funding rose to $3.2 billion, up from $2.5 billion in the first quarter.

Now that crypto’s starting to warm back up — and see more funding — I wondered what venture capitalists were thinking about the crypto/AI debate. So I turned to Framework Ventures co-founder Michael Anderson for some answers. 

Framework, obviously, tends to chat with other crypto VCs. 

“Amongst this crowd, there’s a growing understanding that blockchain may play a crucial role in the AI space by offering a means to align financial incentives in the developer community. As it stands, AI faces considerable monopolization risk by major tech corporations, and so we’re looking at projects that leverage blockchain to create financial incentives for developers to build and stay in the open-source space,” Anderson said.

So is this the name of the game for non-crypto native VCs? Are we going to see them move away from crypto?

“One of the big mistakes that non-crypto VCs make is assuming that crypto can be treated as yet another vertical they can enter easily. They typically assign a few people who have a loose understanding of the space, who then face an uphill battle in the investment committee trying to win over peers who have little to no contextual knowledge of the industry,” Anderson told me.

It’s not the first time though, he added. It happened last cycle, and “Silicon-valley giants raised crypto funds and then either deployed into liquid markets at the top, or bought overvalued centralized companies that flopped.”

Anderson continued: “This class of VC firms probably are starting to realize that winning in crypto will require a much bigger commitment than they originally anticipated, so if they’re starting to take their eyes off the ball to chase the new thing, I’m entirely unsurprised.”

It’s actually not, in Anderson’s opinion, a bad thing for VC funds to chase after trends. 

It could even mean that “there will be less dumb money propping up bad ideas or ballooning valuations.” Or the VCs could also look into the AI/crypto crossover space, which is what Framework is paying attention to.

Anderson’s just not sold on AI being the next big payoff for the traditional VC firms. 

“In general, we think that AI will be a deadend for most VC investors, as the AI incumbents have both the momentum and resources to crush most competition. Look no further than OpenAI’s recent updates making several Y-Cominator startups obsolete almost overnight,” he said.

Framework, instead, plans to focus — and has focused — its energy on “AI projects that are highly differentiated and/or blockchain adjacent.”

So, no, AI’s not going to steal your lunch money anytime soon, but maybe don’t be surprised if it continues to dominate headlines. 

And maybe that’s for the best, so crypto can focus on building without unnecessary distractions.

— Katherine Ross

P.S. David and I need your help. Fill out this survey and help us produce journalism tailored to you and your interests.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Ethena Labs is leaping from its flagship synthetic dollar, USDe, to a full product suite—USDtb, iUSDe, and the Arbitrum-based Converge Chain—designed to marry crypto-native yields with TradFi-grade compliance. Our analysis shows how expanding into CME, ETF options, and tokenized Treasuries could lift protocol revenue from sub-$500 million in a bear case to several billion dollars if favorable regulation and institutional adoption align.

article-image

The L1’s Interwoven Stack is the most opinionated tech stack yet

article-image

Bitcoin is still rising, 11 years after the documentary film The Rise and Rise of Bitcoin

article-image

Arch Labs CEO told Blockworks that the team plans to launch a native token, but declined to give details

article-image

CEO Mike Silagadze tells Blockworks that the US is “open for business” and why its DeFi bank offering is the first of many

article-image

Doing one thing well and leaving everything else out is often what disruptive technologies do best