From storytelling to numbers: The life and death dividing line of crypto projects in 2026

Once upon a time, storytelling was the most powerful weapon in crypto fundraising. A beautiful white paper, a grand vision, and a compelling narrative were enough to sway investors. But now, all of this is rapidly disintegrating before our eyes.

1. The End of the Broad Casting Era: VCs Trust Data, Not Stories

Wintermute Ventures’ data profoundly reveals how thorough this transformation has been. In 2025, this top-tier market maker reviewed 600 projects and approved only 23 deals—an approval rate of just 4%. Even projects entering due diligence numbered only 20%. Founder Evgeny Gaevoy openly states they have completely shifted away from the “scattergun” approach of 2021-2022.

The entire crypto VC ecosystem is undergoing the same metamorphosis. Deal volume plummeted from over 2,900 in 2024 to about 1,200 in 2025—a 60% drop. More critically, the flow of capital has shifted: total global crypto VC investments still reached $4.975 billion but are increasingly concentrated in fewer projects.

The numbers speak plainly: late-stage investments now account for 56%, while early seed rounds have shrunk to historic lows. The US market illustrates this well—deal count down 33%, but median investment size doubled to $5 million. This indicates investors prefer to back only a few select projects and no longer believe in the “betting 100x” speculative logic.

Storytelling is failing primarily because market liquidity is extremely concentrated. In 2025, the crypto market is dominated by institutional capital, accounting for 75%. However, most of this money is stuck in large-cap assets like BTC and ETH. OTC data shows that although BTC and ETH’s market share slightly declined to 49%, the overall share of blue-chip assets grew by 8%.

Even more deadly is the cycle of narratives for alternative coins—dropping from 61 days in 2024 to 19-20 days in 2025. Capital simply doesn’t have time to spill over into small and medium projects. Retail investors are shifting focus to AI and tech stocks, leaving crypto markets short of incremental capital. The traditional four-year bull cycle has been completely shattered.

2. The Three Thresholds for Seed-Stage Projects: A Beautiful Story Can’t Overcome Hard Data

In this highly precise environment, seed rounds are no longer the starting point for burning cash but a critical juncture to prove self-sustainability publicly.

The first threshold is authentic validation of Product-Market Fit (PMF). VCs no longer settle for business plans and visions. They want hard data: at least 1,000 active users or monthly revenue exceeding $100,000. More crucial is user retention—if DAU/MAU ratio is below 50%, users are not buying in. Many projects fail at this stage: they have sleek white papers and cool tech but cannot demonstrate actual user engagement or willingness to pay.

The second threshold is capital efficiency. VCs predict a surge of “profit zombie” companies—those with annual recurring revenue (ARR) of only $2 million and growth rates of just 50%—which won’t attract Series B funding. This means seed teams must achieve “pre-set survival”: monthly burn rate not exceeding 30% of revenue or even turning profitable early on.

Sounds harsh, but in an era of liquidity drought, it’s the only way out. Teams must be lean—under 10 members—prioritize open-source tools to cut costs, and even supplement cash flow through consulting. Projects with dozens of staff and rapid burn rates will struggle to secure next-round funding this year.

The third threshold involves technological evolution. Data from 2025 shows that for every dollar invested by VCs, 40 cents flow into crypto projects also working on AI—double the previous ratio. AI is no longer an add-on but a necessity. Seed projects need to demonstrate how AI can shorten development cycles from six months to two, or how AI agents can drive capital transactions or optimize DeFi liquidity.

Simultaneously, compliance and privacy must be embedded at the code level. With the rise of RWA (Real-World Asset) tokenization, projects need zero-knowledge proofs to ensure privacy. Ignoring these will be seen as outdated.

The final test is liquidity channels. Crypto projects must plan early on how to connect to institutional liquidity pipelines like ETFs or DEX aggregators. In 2025, institutional capital accounts for 75%, and the stablecoin market surged from $206 billion to over $300 billion—an unmistakable signal. Projects should focus on ETF-compatible assets, establish early partnerships with exchanges, and build liquidity pools. Teams thinking “raise first, list later” will not survive this year.

All these requirements mean seed rounds are no longer just testing waters but a comprehensive exam. Teams need cross-disciplinary composition—engineers, AI experts, financial advisors, compliance specialists. They must develop rapidly using agile methods, let data speak instead of stories, and pursue sustainable business models rather than just fundraising for survival.

Numbers don’t lie: 45% of VC-backed crypto projects have failed, 77% generate less than $1,000 monthly revenue, and 85% of token projects launched in 2025 are underwater. These figures tell us that projects lacking self-sustainability won’t reach the next funding round, let alone exit successfully.

3. The Investment Industry’s Watershed: Abandon Storytelling, Embrace Precision in Talent Selection

For investment institutions, 2026 marks a turning point: adapt to new rules or be eliminated.

Wintermute’s 4% approval rate isn’t a boast of pickiness but a warning to the entire industry—those still using old models of broad casting will lose badly. The core issue is that the market’s nature has changed: from speculation-driven to institution-driven. With 75% of capital stuck in pension funds and hedge funds, retail investors flocking to AI stocks, and the cycle for alternative coins shortening from 60 days to 20 days, indiscriminate “casting a wide net” projects are actively handing over money.

Hard data is ruthless: GameFi and DePIN narratives fell over 75% in 2025; AI projects averaged a 50% decline; in October, $19 billion in leverage was liquidated—these all signal one thing: the market no longer pays for narratives, only for execution and sustainability.

Institutions must fundamentally change their investment standards—from “How big can this story get” to “Can this project demonstrate self-sustainability in seed stage.” No more throwing capital at early-stage projects; instead, focus on a few high-quality seed investments or shift to later stages to reduce risk. Post-2025, late-stage investments account for 56%, not by chance but by market voting with their feet.

The investment track must also be redefined. The integration of AI and crypto isn’t a trend but a reality—by 2026, over 50% of investments in the AI-crypto intersection are expected. Funds pouring into purely narrative-driven altcoins, ignoring compliance and privacy, or neglecting AI integration will find their projects lack liquidity, can’t list on major exchanges, and will struggle to exit.

Finally, the evolution of investment methodology is essential. Active outreach will replace passive waiting for pitch decks; accelerated due diligence will replace lengthy evaluations; rapid responses will replace bureaucratic delays. New opportunities like AI Rollups, RWA 2.0, cross-border payment stablecoins, and fintech innovations in emerging markets should be explored.

VCs need to shift from a “gambling for 100x returns” mindset to a “hunt for survivors” approach. Use a 5-10 year long-term perspective rather than short-term speculation to select projects.

Wintermute’s report is a wake-up call for the entire industry: 2026 isn’t just a continuation of the bull market but a battlefield of winners. Those who adapt early with precise talent selection—whether entrepreneurs or investors—will dominate when liquidity returns. Those still clinging to old models, old thinking, and outdated standards will see their projects fail one after another, tokens go to zero, and exit channels close.

The market has changed; the game rules have changed. Only one thing remains constant: projects with real self-sustainability and the ability to survive to listing deserve capital in this era. The age of storytelling is over; the era of pragmatic action has begun.

(Content adapted from WolfDAO analysis report, core data from Wintermute Ventures 2025 Annual Report)