Dragonfly Capital closed its fourth fund at $650 million this week, the identical dimension as its 2022 automobile, raised right into a enterprise market Fortune calls a “mass extinction occasion.”
The headline reads like a vote of confidence: institutional capital returning, crypto winter thawing, alt season loading. However peel again one layer and the image warps.
Dragonfly’s companions describe a pivot towards fintech rails and tokenized real-world property, with the expectation of fewer “native app tokens.”
This is not a blanket “alts to the moon” sign. It is a wager that worth accrues to companies that do not want tokens in any respect, or to tokens that commerce like asset wrappers reasonably than reflexive beta performs.
The contrarian learn: VC cash flooding again can reproduce the precise playbook that broke in 2025.
Extra personal capital, deployed into the identical low-float launch constructions that skilled markets to front-run unlock calendars, creates extra scheduled promote partitions as an alternative of spot-buying firepower.
Manufactured shortage, scheduled dilution
The dominant token launch design of the final cycle labored like engineered hype.
Groups launched with tiny circulating provide, typically single-digit percentages of complete issuance, pushing costs skyward at Token Era Occasions whereas locking most allocation behind multi-year vesting schedules.
Binance Analysis tracked 2024 launches and located a median market-cap-to-fully diluted valuation ratio of 12.3%, indicating that consumers bought into constructions by which 87.7% of the provision was locked.
The maths was difficult: to maintain costs secure throughout that offer stream, the report estimated the cohort would want roughly $80 billion of incremental demand-side liquidity.
With out it, each unlock turned a identified dilution occasion.
Keyrock analyzed greater than 16,000 token unlock occasions and documented a recurring sample. Drawdowns construct throughout the 30 days earlier than the unlock, speed up into the ultimate week, then stabilize roughly 14 days after.
Animoca Manufacturers Analysis quantified the impact: for unlocks exceeding 1% of the circulating provide, costs decline by a median of 0.3% within the week earlier than and by one other 0.3% within the week after.
The unlock calendar turns into a everlasting quick thesis baked into the token’s ahead curve.
Memento Analysis’s 2025 launch tracker makes the decision empirical: of 118 tokens that went dwell final yr, 84.7% now commerce beneath their TGE valuation, with a median drawdown of 71.1% on a completely diluted foundation and 66.8% on a market cap foundation.
Excessive FDV launches underperformed the equal-weight basket. The larger the hype, the steeper the autumn.
Why “crypto VC funding is again” does not imply spot shopping for
Dragonfly’s $650 million would not translate into $650 million in market purchases that may carry token costs right now.
Enterprise funding flows into personal allocations: fairness stakes, Easy Agreements for Future Tokens at discounted charges, and early-stage rounds that give insiders provide earlier than public listings.
The value assist arrives later, typically structured because the unlock mechanism itself.
Binance Analysis explicitly connects the rise of low-float, high-FDV constructions to inflows of personal capital and aggressive pre-launch valuations.
The identical enter of extra VC cash can reproduce the identical output: extra dilution overhang, extra front-runnable unlock calendars. Dragonfly’s personal thesis reinforces this.
Fortune quotes associate Tom Schmidt describing crypto’s “monetary period,” the place native protocol tokens give approach to tokenized shares and fintech rails. That is bullish for sure companies, however it implies a world the place upside accrues to fairness or regulated merchandise, to not freely floating alts.
Take this week’s instance. On Feb. 20, LayerZero unlocks roughly $46 million in ZRO tokens, representing 5.98% of the circulating provide and concentrated in insider allocations.
Tokenomist flags it as a near-term overhang in skinny liquidity. That is what “bullish VC” appears like in apply: a public unlock calendar that gives refined members with a identified exit window and retail holders with a predictable drawdown.
The size drawback
Tokenomist’s 2025 overview tallies $97.43 billion of tokens launched throughout the yr, break up into $18.77 billion from insider unlocks and $78.66 billion from non-insider allocations.
For the week of Feb. 16-22 alone, scheduled releases exceed $700 million. This is not background noise, however a structural sell-side stream that dwarfs natural demand in all however probably the most liquid property.
Keyrock’s information confirms recipient sort issues, with crew and investor unlocks proving extra damaging than ecosystem allocations, probably as a result of insiders face fewer coordination prices and clearer revenue incentives.
Binance Analysis warns that with out matching buy-side demand, the trail ahead requires tens of billions in new capital simply to tread water.
Dragonfly’s $650 million, even when totally deployed into token offers, represents a fraction of the liquidity wanted to soak up the unlock schedule of initiatives already dwell.
What good tokenomics truly appears like
The response to failed low-float launches is not to remove tokens, however to revamp the inducement construction in order that unlocks do not operate as ticking time bombs.
Backpack launched with 25% preliminary float, completely community-facing, and structured the remaining provide round growth-triggered unlocks tied to consumer progress and protocol milestones.
As an alternative of time-based cliffs, provide launch connects to key efficiency indicators. The market can worth optimism or pessimism in actual time, reasonably than pricing a deterministic provide schedule.
Jupiter allotted 50% of protocol income to token buybacks, making a verifiable sink tied to precise money flows. The crew has mentioned focusing on web zero emissions in 2026 by restructuring distributions.
Income-linked buybacks convert protocol success into deflationary stress reasonably than purely dilutive issuance.
USDai’s $CHIP sale allotted 7% of provide to the general public sale, unlocked 100% at TGE, and printed express mechanics and dates.
The method trades early worth stability for radical transparency. There isn’t any hidden insider schedule, no shock vesting tranches. The token launched unstable, however with out the structured sell-wall that depresses costs months later.
Dragonfly’s pivot towards fintech rails affords one other blueprint: some merchandise do not want tokens. If the enterprise mannequin is regulated as a monetary service, forcing a token onto it creates a dilution instrument reasonably than a helpful asset.
| Mannequin / Instance | Preliminary float | Unlock design | Purchase-side sink / assist | Why it reduces overhang |
|---|---|---|---|---|
| Low-float / heavy VC unlocks (failed mannequin) | Typically low / single-digit to teenagers % | Time-based vesting with cliffs; massive insider tranches | None (depends on new consumers / narrative) | Creates manufactured shortage at TGE, then a identified promote wall as unlocks arrive; market front-runs dilution |
| Backpack | 25% (community-facing) | KPI / growth-triggered unlocks tied to milestones | Implicit: milestones align provide with adoption | Markets worth efficiency (milestones) as an alternative of a deterministic calendar; reduces “scheduled dump” dynamic |
| Jupiter | n/a (token already dwell) | Emissions restructuring mentioned; objective of net-zero emissions in 2026 (proposal/dialogue) | Income-linked buybacks (50% of protocol income) | Converts protocol success into verifiable demand-side assist; buybacks act as a sink that may offset issuance |
| USDai ($CHIP) | 7% public sale allocation; 100% of sale unlocked at TGE | Clear mechanics/dates; avoids hidden cliffs on the market tranche | Transparency / broad distribution at sale | No shock cliff for the general public tranche; reduces “retail as exit liquidity” really feel and removes calendar shock from that portion |
| Fintech rails / no token | n/a | No token issuance/unlocks | Fairness / income seize (conventional) | Eliminates token dilution completely; avoids making a dilution instrument the place the product doesn’t want one |
The guidelines
Earlier than shopping for a token, buyers ought to verify 4 metrics: market cap to totally diluted valuation, share of provide held by insiders, the dimensions of the following three scheduled unlocks as a share of circulating provide, and the dates these unlocks land.
If the MC/FDV is beneath 20%, if insiders management greater than half of complete issuance, and if the following unlock exceeds 5% of float, they’re shopping for right into a construction designed to extract worth.
If an investor would not purchase a inventory with a identified 20% share issuance scheduled for subsequent month, then that token is a cross, too.
The mechanics are an identical. The return of enterprise funding would not change this, and might even amplify it.
Dragonfly’s $650 million alerts that institutional LPs nonetheless again choose crypto managers, even because the broader enterprise ecosystem contracts.
Nonetheless, whether or not that capital flows into token-heavy offers or into fintech rails, whether or not it reproduces low-float constructions or funds companies that do not want tokens in any respect, determines whether or not “VC is again” interprets to upside for liquid property.
The market realized to cost dilution. The query is whether or not the following wave of initiatives realized the identical lesson.