Cryptocurrency VC Talent Drain Warning: In-Depth Analysis of Multicoin Co-Founder Departure and Web3 Confidence Crisis

The passing of a prominent figure in the cryptocurrency venture capital space often signals a clearer industry shift than market fluctuations.

On February 5, 2026, influential crypto investment firm Multicoin Capital co-founder Kyle Samani announced his resignation from his managing partner role.

He decided to dedicate more time to exploring other technological fields but explicitly stated he would not completely leave the crypto space: “While I am stepping back professionally from this industry, I will continue to make personal investments in the field.” His departure sparked widespread discussion within the crypto community and was seen as a barometer of changing industry confidence.

Wave of Departures: Talent Drain and Structural Transformation in Web3

The departure of Multicoin Capital co-founder Kyle Samani is not an isolated case but a significant sign of the ongoing talent exodus in the crypto industry. Since its founding in 2017, Multicoin has been highly regarded for its forward-looking investments in projects like Solana and Helium.

Samani, known for his “research-driven investment” philosophy and candid style on social media, is regarded by many as one of the most “authentic” voices in the industry.

His departure coincides with structural upheaval in the Web3 social space. In late January 2026, two landmark acquisitions took place within just 48 hours.

Lens Protocol transferred management to Mask Network, while Farcaster was fully acquired by its core infrastructure provider Neynar.

These events led several well-known founders to leave their original roles, shift to advisory positions, or exit entirely. These changes reflect a deep correction in the market’s valuation logic for “protocol layer” versus “application layer” value capture.

Confidence Crisis: Industry Belief System Facing Collapse and Rebuilding

Before his departure, Samani tweeted: “Cryptocurrency isn’t as interesting as many crypto enthusiasts hope. I used to believe in the vision of Web3 and decentralized applications, but now I don’t anymore.”

Although he quickly deleted the tweet, this shift in thinking sparked doubts about the entire industry’s belief system.

This crisis of confidence is especially evident in industry data. The Farcaster ecosystem is experiencing a severe “scissors effect”: while monthly active users seem stable, user interaction data peaked in Q2 2024 and then sharply declined. By January 2026, interaction metrics are only a small fraction of their peak.

This indicates that although users technically still exist, actual engagement has significantly decreased.

Market participants have a cognitive gap in defining “success.” Some critics sharply pointed out: “Farcaster has $150 million in funding behind it but was ultimately acquired by Neynar, which raised only a few tens of millions of dollars.”

This “big fish swallowing a small pond” outcome is interpreted as a sign of valuation bubble burst and failed product-market fit validation.

Macro Context: Geopolitical and Capital Flow Pressures

The current confidence crisis in crypto is occurring against a broader macro backdrop. Uncertainty in U.S. policies has risen again, with market sensitivity to policy continuity and Federal Reserve independence significantly heightened.

Coupled with recurring headlines related to trade and geopolitics, overall risk appetite has rapidly cooled.

Capital flows also reflect this cautious attitude. Bitcoin and Ethereum spot ETFs have experienced large-scale net outflows for several consecutive days: BTC ETFs saw about $1.33 billion net outflow this week, and ETH spot ETFs have had four consecutive days of net outflows since January 20, totaling approximately $611.17 million this week.

This capital movement further reinforces market deleveraging behavior.

Technical Reflection: Core Value and Application Boundaries of Blockchain

Samani’s departure has sparked a profound reflection on the essence of blockchain technology. He ultimately concluded: “Blockchain is mainly an asset ledger that can reshape finance, but its potential in other fields is limited.” This view reflects a growing consensus within the industry that blockchain’s true advantage may be confined to financial infrastructure.

This reflection aligns with Vitalik Buterin’s views, who has criticized many crypto social projects for “over-reliance on tokens and hype.”

Suji, founder of Mask Network, also candidly stated that Friend.tech’s “strong financial” model is flawed, and “weak finance, strong social” is the future.

Even at the technical level, the blockchain industry faces challenges. As more layer-2 networks and blockchains emerge, it becomes increasingly difficult to explain “why we need 100 layer-2s,” and even Vitalik himself is reflecting on past strategic mistakes.

Future Directions: Practical Development and Innovation Integration

Despite the confidence crisis, blockchain technology has not lost its development potential. The industry is shifting toward a more pragmatic approach, transitioning from “decentralized idealism” to an integrated phase of “product pragmatism.”

A key trend is the fusion of AI and blockchain. By 2030, we expect to see “AI agents” operating on blockchain. These are bots with their own crypto wallets that can negotiate with other bots, pay for their own cloud storage, and execute tasks without human intervention.

Another major trend is the tokenization of real-world assets. We are moving beyond the era where blockchain is used only for cartoon JPEGs. The real trend by 2030 is to put “real” things on-chain—gold, real estate, government bonds, and even carbon credits.

The rise of modular blockchains also offers new pathways for industry development. Developers are splitting blockchain into layers—one might handle transaction speed, while another focuses on data security and accessibility.

This “Lego-style” construction makes Web3 development more flexible.

Industry Outlook: Opportunities for Builders in a Bear Market

While this confidence crisis in crypto is unsettling, it may also be a necessary phase of industry maturation. Unlike the catastrophic collapses of LUNA or FTX, many current project adjustments are seen as “beneficial cleanup.”

For example, Farcaster’s developer Merkle Manufactory chose to return remaining funds to investors, demonstrating responsible capital management and avoiding waste on hopeless directions.

Market data shows that the Web3 market continues to grow. Last year, the Web3 market size was approximately $52.67 billion, and it has now surpassed $68.74 billion. Analysts project that by 2032, this sector will expand to over $400 billion.

In the coming years, the focus will shift more toward practical development rather than speculation. Whether it’s decentralized social media platforms where users can own their followers or global supply chains tracking every lemon from tree to store, Web3 will become the backbone of the next economy.

Summary

Samani chose to retain his chairman position at Solana’s financial company Forward Industries and requested to redeem his shares and warrants from Multicoin Master Fund in kind, rather than cash.

This former “Solana high priest” did not choose to completely say goodbye but instead participate in the industry he has dedicated nearly a decade to, in a new way.

The market’s noise and price volatility once overshadowed the true value of cryptocurrencies. The industry needs time to distinguish which technologies can stand the test of time and which are merely short-term market noise.

Perhaps, as one observer said: “The bubble of the old era has burst, but the golden age of builders has just begun.”