This $2.5 billion VC fund from Coinbase cofounder is the biggest in crypto but still 'probably small'

• Coinbase's Fred Ehrsam and former Sequoia partner Matt Huang have raised $2.5 billion for Paradigm One.
• It has surpassed Andreessen Horowitz's crypto fund from earlier this year, which had raised $2.2 billion.

After three years in the making, the largest-ever crypto venture capital fund has arrived as Paradigm One finishes scooping up $2.5 billion.

It's the first VC fund from Coinbase cofounder Fred Ehrsam and former Sequoia partner Matt Huang, who launched Paradigm One in 2018 and raised an initial $400 million, according to the Financial Times.

The $2.5 billion they eventually raised is double their initial investment goal thanks to the help of other investors vying to contribute.

"It is probably small relative to where we're going in 10 years," Ehrsam told the FT.

Now it has beaten out Andreessen Horowitz's crypto fund from earlier this year, which had secured a then-record $2.2 billion in backing. Both funds have bet big on a rapidly growing ecosystem of applications based on ethereum.

Paradigm One, as well as Andreessen Horowitz' fund, is built upon tokens - digital assets granted to users over time.

While tokens can be highly volatile - they rise and fall on the whims of crypto speculators - Paradigm One has accumulated some of the largest token holdings in the world. And Paradigm's founders view them as long-term holdings that could take up to 10 years to pay off.

"The biggest companies in the world are large internet tech companies powered by network effects," Ehrsam told the Financial Times. "We think decades into the future it's very clear the largest entities in the world will be powered by tokens."