In Q1 2024, Web3 startups raised just short of $1.9 billion across 346 deals, a 58% increase from the final quarter of last year. But the overall downward trajectory of crypto VC interest has lingered, with year-ago quarterly figures down 17% and the deal count at roughly half.

Investors with more of a “long-term thesis” when it comes to Web3 are the ones deploying capital lately, a stark contrast to some of the hype-chasing “tourist investors” more prevalent the last few years, Chris Metinko, the report’s author, told Fortune. “To be honest,” he added, “they are probably sitting in AI.”

“You’re seeing investment in the underlying infrastructure of a decentralized internet—more the ‘picks and shovels’ of Web3—and away from the crypto wallets and lenders that we saw raise big rounds in the heyday of 2021 to 2022,” Metinko explained.

Big rounds remained rare in Q1, as the three largest totaled less than $300 million. Leading the way was a $112 million seed round for Exohood Labs, a company merging AI, quantum computing, and blockchain, at a valuation of $1.4 billion. EigenLabs, which allows developers to “restake” Ether tokens, raised $100 million in a Series B led by a16z crypto, and Freechat, a decentralized social network based on blockchain technology, won $80 million in a Series A. 

Valuations also were on the rise, as Web3 saw four unicorns minted after a Q4 lull in which only the Cayman Islands-based blockchain messaging tool Wormhole earned a horn. New additions to the herd include the aforementioned Exohood Labs, Ethereum L2 Berachain for financial applications, blockchain service Io.net to sell excess GPUs, and Web3 infrastructure startup Polyhedra Network. 

“The next few quarters could be very telling for the future of Web3,” Metinko wrote in the report. “While investors say they expect investment to eventually bounce back as a decentralized internet becomes more built out, that may not happen for another year as venture continues to stabilize after the go-go days of 2021.”

That’s because there is often a lag between a raise closing and its documentation. Following the approval of U.S. spot Bitcoin exchange-traded funds and the upcoming Bitcoin halving, the price of Bitcoin is up nearly 60% this year, while Ether has nearly doubled in value, suggesting the venture market may not yet be reflecting what could be long-term, sustainable cryptocurrency appreciation. 

Last week, Monad Labs secured the largest Web3 funding round of the year so far, a $225 million round led by Paradigm. Monad is a layer-1 blockchain compatible with Ethereum but which can process transactions faster. The round is reminiscent of crypto’s 2021-2022 golden era when L1s raised big venture sums, such as Aptos Lab’ $150 million funding.

“Perhaps,” Metinko added, “that is a harbinger of more big-money funding to come.”