Israeli Crypto VC Warns: The Retail Era Is Over, Institutions Are Here to Take Over

Author: Avishay Ovadia (Co-Founder of Collider)

Compiled by: DeepWave TechFlow

DeepChain Overview: Collider is an Israeli crypto VC with modest scale, yet it reflects some of the industry's upstream players' perspectives.

Its founding partner, Avishay Ovadia, wrote a perspective on the direction of the crypto industry: the era of retail investors is over; institutions are not here to "embrace decentralization," but to take it apart.

They want the efficiency of blockchain, not the ideology of cryptography. For entrepreneurs and investors, the old playbook is obsolete—the rules of the digital asset economy have completely changed.

Body:

For ten years, we told ourselves a fairy tale.

We believe mass adoption of cryptocurrency will be a bottom-up uprising. Ordinary people, retail investors, will grow tired of banks, take the orange pill, and migrate to a permissionless utopia.

Last year, this illusion was permanently disproven.

The influx of visitors are not the users we envisioned—they are gamblers. They aren’t seeking a new financial system; they’re looking for a casino with higher leverage. They trade memecoins, exploit each other, and vanish into the shadows when the music stops.

While retail investors were busy losing money on memecoins, something more important happened: the "big players"—institutions, banks, and payment giants—didn’t step back. They went all in.

They are not here because they believe in decentralization. They have discovered that blockchain is the most efficient fund transfer system ever created. They are not here to chase technological ideals—they are here to chase profits. Larry Fink recently said that tokenization is one of the two major trends reshaping financial services. We are no longer talking about a niche market, but a full-scale transformation worth $140 trillion.

We handed over the keys to the kingdom ourselves. We built the infrastructure and validated the concept, and now the custodians have come to reap the territory.

We suffered from immense arrogance. We thought we could change them. We believed the Bitcoin miracle could be replicated with any altcoin. We thought they would eventually buy our useless governance tokens, ghost-town L1s and L2s, and play by our rules. We were wrong. For institutions, giving up control isn’t called “progress”—it’s called suicide. Their business models are built on control.

So they didn’t come into our mud pit. The vast majority of institutions won’t join our DAO or care about our “community vibe.” They’re building their own walled gardens, joining ecosystems like Canton, Zero, Tempo, and Kinexys, and constructing orchestration layers that connect traditional platforms with new chains. They’re using blockchain, tokenization, instant settlement, and self-custody—but stripped away the “crypto” skin.

They preserved user privacy, data silos, and profits. They took our open-source code, forked our protocol, but didn’t buy our token. Swallow the technology, spit out the ideology.

This game has evolved along a predictable, chaotic trajectory to its current endpoint.

From 2009 to 2014 was the bitcoin craziness phase, with a small group of cypherpunks tinkering on the fringes. This was followed by the crypto industry phase, with Ethereum and smart contracts taking center stage. By the 2018 bear market, the narrative shifted to blockchain technology, as enterprises attempted to separate ledgers from assets—but failed. Then came the rise and spectacular collapse of Web3, where NFTs, blockchain games, and the creator economy briefly shone brightly until FTX’s implosion turned off all the lights. In 2024, fueled by an election year and Trump’s campaign momentum, the crypto industry made a glamorous return, only to sink into a quagmire of greed, disdain, and toxicity.

Now, in this new bear market, we have finally reached the destination we’ve been striving for: the digital asset economy.

This is the final stop. Cryptocurrency is no longer an “industry”—it has become an infrastructure layer. It is the invisible engine driving the world of financial technology. It’s not the crypto world consuming Wall Street; it’s Wall Street consuming us.

If you're a purist, this feels like a betrayal. If you're a strategist, this is where the real money is.

We have finally reached the point where trillions of dollars are waiting to be deployed. We are entering the "Distributor Era." Big money won't move without regulation, without KYC, without the permission of the banking system's infrastructure. DTCC's announcement to tokenize assets held by DTC and support liquid assets like the Russell 1000 Index is not a pilot—it's the sound of the gates opening.

We are about to tokenize every asset on Earth, from real estate to private credit to government bonds. But most of it will not be done through decentralized swaps on public blockchains. It will be done through payment giants and banks.

Two paths. You can crouch in the corner and cry, “The spirit of crypto is gone,” or you can recognize that we’ve just won the biggest war in financial history. We convinced the world that this technology works. Now, we must build for those who truly have the capital to use it.

The future of this industry is not in air tokens. It’s embedded in the hard infrastructure serving new participants. It’s already running today: look at the institutional-grade solutions that have broadcast trillions of dollars in on-chain transactions, facilitated billions in institutional-to-institutional trades, and tokenized billions in assets. This is the new application layer.

It’s time to stop being an “crypto bro” and start thinking like a seasoned fintech veteran.

Think about it: if every asset on Earth were tokenized, what competitive advantage would buying that specific "crypto" token offer? If you could trade any global asset 24/7 through trusted traditional brokers with instant settlement, why would you still send funds to offshore exchanges or worry about non-custodial wallets? Why risk being hacked and losing everything outright, when you could trade securely and easily through existing financial dashboards?

Entrepreneurs, don’t build in a vacuum. Before writing your first line of code, walk through every distribution channel in the industry. Understand their needs and deeply grasp their fears: the fear of regulatory crackdowns, the fear of losing control, the fear of uncontrollable security incidents. Your goal is to create something they cannot build themselves—but that fits seamlessly into their existing world.

Investors, the old playbook is dead. The days of betting on low-circulation, high-FDV vapor projects and hoping retail investors will pick up the slack at 100x are over. Digital asset investing has become extremely difficult. We are moving toward real revenue cycles, real utility, and businesses that generate income. You need to invest in projects that have genuine moats within the open-source technology world. 99.99% of tokens do not. Finding those with strong moats, top-tier teams, real usage, token value accumulation, institutional adoption, reasonable valuations, healthy release curves, active communities, high liquidity, risk management capabilities, and market opportunities is hard. But it can be done.

Stop fighting against institutions. They are the new distribution channels. They will bring the next billion users and bring the next $100 trillion into the digital assets economy—even if these users have no idea they’re using blockchain.

The game has changed. The players are bigger. The stakes are higher. Welcome to the final stop. What you do next is up to you.