The crypto community has recently discussed the Neobank concept in Web3 more frequently. Investors are paying closer attention to projects with real-world applications, and this sector is drawing significant interest.

Low-cap altcoins within the Neobank narrative may be undervalued. They create new opportunities for investors.

What Potential Do Neobanks Have?

A Neobank in Web3 refers to a fully digital bank that operates entirely on blockchain. It requires no physical branches. It integrates DeFi features, including self-custody, yield-bearing accounts, and Visa/MasterCard crypto spending cards.

Unlike traditional neobanks, Web3 Neobanks emphasize transparency, the removal of intermediaries, and cross-chain connectivity.

According to a report from Precedence Research, the global neobanking market reached $148.93 billion in 2024. It is projected to grow at a CAGR of 40.29% and hit $4,396.58 billion in 2034.

Neobanking Market Size. Source: Precedence Research

This massive growth potential can benefit Web3 Neobanks. The first reason is the increasing adoption of stablecoin use cases. The second is a shift in investor mindset toward crypto projects with real-world utility rather than hype-driven valuations.

“If stablecoin is to power Neobanks on-chain, then the current Web2 identity infra won’t be able to keep up,” investor Mike S predicted.

Coingecko indicates that the current Neobank category has a total market capitalization of $4.19 billion, comprising 13 major projects. Mantle leads with a market cap of $3.31 billion, followed by Ether.fi at $412 million.

Additionally, Dune data indicate that physical card transaction volume from Web3 neobank projects reached a record high last month, surpassing $379 million.

Crypto Card Volume. Source: Dune.

Although the transaction volume remains small, analysts believe its growth potential is huge. Meanwhile, the link between Web3 projects and traditional payment companies is becoming stronger.

Crypto investors believe Neobanks will surge thanks to AI agents and blockchain privacy. Some experts go further and predict that Neobanks will become one of the key narratives shaping crypto trends in 2026.

Can Low-Cap Altcoins in the Neobank Sector Deliver Big Returns for Early Investors?

Despite optimistic predictions, Coingecko’s top three Neobank projects — Mantle (MNT), ether.fi (ETHFI) and Plasma (XPL) — all experienced prolonged price declines in November.

However, several low-cap altcoins with market caps below $100 million have recently attracted fresh capital and delivered strong performances.

1. Avici (AVICI)

Avici (AVICI) is a self-custodial crypto banking project built on Solana. It focuses on spending cards and on-chain swaps. Over the past two months, its market cap has increased tenfold to $77 million, and its price has exceeded $6.

Stalkchain reported a sharp rise in AVICI purchases in recent days. One wallet has actively accumulated about $35,000 worth of AVICI at a pace of $266 per minute.

The project announced that Avici Card reached 100,000 transactions in November. It described the card as becoming a daily habit and part of users’ everyday routines. Some investors expect AVICI to get $50–$100.

2. Cypher (CYPR)

Cypher is a protocol built on Base Chain. Users can receive CYPR tokens as rewards for card-based transactions.

Cypher aims to create an open economic model that drives growth among brands, service providers, online influencers, AI agents, and crypto card users.

The project’s market cap is currently under $10 million. Analysts believe it is undervalued.

Alea Research recently highlighted several reasons for this view. Cypher processes payment value roughly twice its market cap. It also ranks second after EtherFi in card transaction volume. Low liquidity and limited listings on major CEXs have prevented significant price growth.

3. Machines-cash (MACHINES)

Machines-cash (MACHINES) is a newly launched crypto payment platform focused on privacy on Base. Its current market cap is under $5 million.

Analysts believe the project could attract capital inflows similar to those of AVICI, potentially achieving a 10-fold increase. Several reasons support this view. The development team includes talent with experience from MetaMask, Trust Wallet, DARPA, Flipside Crypto, Paxful, and Polygon. An advisor from AVICI also participates in the project.

Machines-cash allows anonymous and secure Visa card payments. Users can transact using alias accounts that hide wallet addresses, transaction histories, and personal identities. This feature is especially attractive as interest in privacy continues to rise.

Market sentiment remains gloomy, which will significantly affect the potential of low-cap projects. Moreover, as more crypto neobanks emerge, selecting truly high-quality projects becomes increasingly challenging.

Jay Yu, a researcher at Pantera Capital, believes that retention, card transaction volume, and user count will determine the winners in this emerging market.