Why is Dragonfly the biggest winner of this cycle?

Author: Zhou, ChainCatcher

Over the past year, beneath the surface of the crypto market’s volatility and rapidly shifting narratives, there have been only a handful of projects that have truly proven themselves and delivered real value.

However, when we line up the names of the most high-profile recent projects—be it high-performance blockchains like MegaETH and Monad, trending yield protocols like Ethena, or prediction market pioneer Polymarket—Dragonfly, the investment fund, is almost always listed among their early or key backers.

As one seasoned industry investor put it, Dragonfly is the biggest winner of this cycle.

Dragonfly’s Investment Profile and Background: Driven by Trading Instinct

Dragonfly is a venture capital fund focused on the crypto space, founded by Bo Feng. As an early investor, Bo Feng has deep insights into exchange operations, liquidity needs, and trading scenarios, which gave Dragonfly a financial perspective from the outset. He has often emphasized that blockchain should not be simply understood as a “faster internet,” but rather as a set of tools for rebuilding the financial stack.

Dragonfly Managing Partner Haseeb Qureshi has repeatedly highlighted cross-cycle issues. In his view, the real hard problems are not the rotation of tracks or narratives, but those systemic pain points that resurface across bull and bear markets:

How can performance bottlenecks be overcome? Can on-chain settlement mechanisms withstand extreme stress? Do yield structures have long-term sustainability? How can data be transformed into tradable financial assets? Without systematic risk hedging, how can institutional capital safely enter the market?

These questions are easily glossed over in the feverish narratives of a bull market, but resurface when the market returns to sobriety.

In his recent piece, “In Defense of Exponential Growth,” Haseeb Qureshi pointed out that the market often misprices the value of Ethereum, Solana, and the new generation of L1s (like Monad, MegaETH), because it falls into the “linear thinking fallacy”: using traditional models like P/E ratios and revenue metrics to judge blockchains, treating exponentially growing businesses as if they are steady-state operations.

He firmly believes that L1 project pricing is analogous to biotech: even with only a 1% to 5% chance of becoming the next Ethereum or Solana, it’s rational to support multi-billion-dollar valuations (i.e., “probability premium”). Thus, long-term conviction is the true edge in crypto investing, often forgotten by most.

Reviewing Dragonfly’s investments over the past three years, we can clearly trace a complete chain from foundational infrastructure to upper-layer applications:

• Public chains and scaling: Monad (2023 seed round), MegaETH (2024), Prodia (2024), Caldera (2023), etc.;
• Trading infrastructure: Lighter (2024), Level (2024), Orderly (2023 expansion), Bitget (2023 strategic round), etc.;
• Stable assets and yield: Ethena (2023-2024 multiple rounds), Pendle (2023), etc.;
• Data and tools: Kaito (2023 seed/Series A), Polymarket (2024-2025 two rounds), etc.

This is not a scattergun approach, but a clear preference: to prioritize long-term gaps along key links in the chain, then seek the essential pieces for each link.

This deep understanding is directly reflected in Dragonfly’s investment preferences. They rarely seem to chase projects for short-term multiples, but instead focus on whether a mechanism or product will still matter to the industry five or even ten years from now.

Core Differentiators and Challenges

The underlying logic of Dragonfly’s success is built on two mutually reinforcing pillars of differentiation.

First, Dragonfly has a strong secondary market trading team, which fundamentally distinguishes it from many pure-play early-stage VCs. This setup dates back to 2019 and manages over $1 billion in liquidity, forming a moat around its investment decisions. The L2 team can capture real-time trading sentiment, capital flows, and narrative shifts much earlier; their sensitivity to metrics like liquidity and liquidation pressure far exceeds that of traditional early-stage VCs, allowing real trading data to inform primary investment decisions. Haseeb Qureshi has publicly stated that the secondary market is not an exit, but the vanguard of investing.

Second, Dragonfly invests in multiple trading platforms such as Bitget and Bybit, not just for equity value appreciation, but to transform these platforms into amplifiers for stable asset distribution and liquidity channels.

Through its strategic positioning on trading platforms, Dragonfly has successfully pushed stable assets it supports (like Ethena’s USDe) into exchange ecosystems. Once a stable asset can be used as collateral or a base asset for trading pairs on exchanges, user demand and adoption are greatly stimulated, quickly expanding the stablecoin’s circulation.

Admittedly, the best time to evaluate a VC is not during a bull market, but when most are hesitant to deploy capital. Over the past year, the early-stage crypto market has clearly cooled. According to RootData statistics, as of 2025 there have been 1,058 recorded financing events, down 46% from the 2022 peak of 1,962. In this cooled environment, most funds have actively slowed down, and some capital has shifted to AI or traditional tech.

Against this backdrop, competition for quality projects has intensified. Dragonfly not only has to compete with established, well-funded VCs like Paradigm for early-stage stars, but also face the liquidity impact from the entry of traditional finance giants; meanwhile, leading exchanges are building vertical tracks through their own investment and incubation arms. This poses severe tests for Dragonfly’s deal sourcing, ecosystem control, and long-term holding capability.

Additionally, as frontier technology sectors like AI increasingly integrate with crypto, whether a crypto-native fund like Dragonfly can convince founders of its professional depth in cross-sector projects becomes a key challenge.

Conclusion

In earlier ChainCatcher interviews with early-stage crypto investors, as referenced in the article “New Cycle, Old Rules for Crypto VCs,” it was noted that as many crypto-native VCs indulge in narrative-driven and short-term speculation, they face a mismatch between value capture and risk-bearing. In contrast, Dragonfly’s trading instincts, secondary market hedging ability, and emphasis on stablecoin cash flows are a return to the old rules of long-cycle dollar funds: fine-tuned management of systemic risk, and the search for sustainable, organically-growing revenue models.

Viewed this way, Dragonfly’s emergence as a winner this cycle reflects how fund managers are returning to traditional rules in the new crypto era. However, to break through its current growth boundaries amid competition from traditional giants, financial institutions, and major exchanges, and to meet the professional challenges brought by the convergence of crypto and frontier technologies, Dragonfly must consider how to extend its trading instincts into cross-disciplinary technological infrastructure in order to maintain its long-term competitive edge.