Summary:
DAT deals are booming, but traditional crypto startup funding has dropped 56% year-over-year
VCs favor DATs for their instant mark-to-market pricing and quicker liquidity
Funding for traditional rounds fell to $6.05 billion, a 26% decline excluding Binance’s $2 billion raise
Investors now prioritize revenue-generating protocols over narratives, raising the bar for startups
Early-stage funding faces challenges like fewer small crypto funds and a "Series A crunch"
Underfunded sectors like DePINs and crypto–AI offer long-term potential
Most VCs expect a shakeout in DATs, with NAV premiums compressing and consolidation of smaller players
The Rise of Digital Asset Treasury (DAT) Deals
In recent months, Digital Asset Treasury (DAT) deals have surged, becoming the focal point for large crypto fundraises. VCs are flocking to these deals, drawn by their instant mark-to-market pricing and quicker liquidity compared to traditional ventures. However, this boom raises a critical question: Are DAT deals overshadowing general crypto startup funding?
The Impact on Traditional Crypto Startup Rounds
Data from The Block Pro reveals a stark contrast. In 2025, crypto startup VC rounds (excluding DAT deals and token sales) totaled 856, a 56% drop from the 1,933 recorded in the same period last year. While total funding has slightly decreased from $8.13 billion to $8.05 billion, this figure is buoyed by Binance’s $2 billion raise in March. Excluding this, funding for traditional rounds plummets to $6.05 billion, marking a 26% year-over-year decline.
Why VCs Are Betting on DATs
VCs highlight several advantages of DATs:
- Instant mark-to-market pricing
- Quicker liquidity
- Ability to raise more capital when trading at a premium to net asset value (mNAV)
For now, liquid funds dominate DAT investments, while some VCs use them as a temporary parking spot for idle capital. However, the sustainability of mNAV multiples remains a question, especially for Bitcoin- and altcoin-focused DATs.
The Shift Towards Fundamentals
The crypto funding landscape is also evolving towards a sharper focus on fundamentals. Investors now prioritize revenue-generating protocols with clear value capture over mere narratives. Projects like Hyperliquid, which redirects significant revenue to token holders, have set a new benchmark. This shift has led to a healthy reset, steering VCs away from the "vaporware token game."
Challenges in Early-Stage Funding
Beyond DATs, several factors are constraining early-stage funding:
- Fewer small crypto funds raising capital
- Reduced "dry powder" for early-stage deals
- "Series A crunch" due to limited firms leading these rounds
Despite these challenges, the quality of dealflow has improved, with more teams presenting revenue, compliance, and distribution plans.
Underfunded Opportunities
Certain sectors remain underfunded but hold promise:
- DePINs (Decentralized Physical Infrastructure Networks)
- DeFi protocols with proven revenue models
- Zero-knowledge tech for on-chain data
- On-chain intellectual property and capital markets
- Crypto–AI convergence
The Future of DATs
Most VCs agree that DATs are here to stay, but anticipate a shakeout. Predictions include:
- NAV premiums compressing to 1.03–1.07x for Bitcoin treasury firms
- Trading volume concentrating in a few large-scale DATs
- Consolidation of smaller DATs over time
Key Takeaways
The crypto funding landscape is undergoing a significant transformation, with DAT deals taking center stage. While they offer liquidity and pricing advantages, their dominance may be squeezing out traditional startup funding. The focus on fundamentals and revenue is a positive shift, but challenges in early-stage funding persist. Underfunded sectors like DePINs and crypto–AI present untapped opportunities, while the future of DATs hinges on their ability to sustain mNAV multiples and avoid a "dramatic shakeout."
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