Venture Capital Funds Back Ethereum’s MakerDAO in Boost for DeFi
If you’ve perused Crypto Twitter at all over the past few months, you’ve likely heard the term “decentralized finance” or “DeFi” tossed around in relation to Ethereum, the second-largest blockchain by the market capitalization of its cryptocurrency.
To put it simply, DeFi is applications that the regular world of finance handles today put onto a decentralized blockchain and implemented with Ethereum and tokens based on the network.
While many proponents of Bitcoin are skeptical of DeFi, venture capital firms seem to be all for it.
Announced in a blog post published on Thursday, the Maker Foundation, the organization that is behind much of the development of Ethereum application MakerDAO, has announced that venture capital funds Dragonfly Capital Partners and Paradigm have acquired $27.5 million worth of MKR, approximately 5.5% of the total MKR supply.
OFFICIAL: Maker Foundation Announces $27.5 Million MKR Sale to Dragonfly Capital Partners and Paradigm
Apparently, these purchases have been made to help Maker’s efforts improve the adoption of MakerDAO native cryptocurrency DAI in Asia. CEO of the Maker Foundation said:
“Dai continues to be the stablecoin of choice in all global markets for its decentralization and overall stability… The support and expertise of Dragonfly Partners and Paradigm will give Dai an unparalleled advantage in driving innovation and adoption in Asia.”
Notably, Asia is currently dominated by Tether’s USDT cryptocurrency, which has acted as a key onramp and offramp for traders in the region, especially Bitcoin traders in China, for years now.
Dragonfly Capital Partners’s and Paradigm’s decision to back MKR comes shortly after a16z crypto, the blockchain-centric investment branch of legendary venture capital fund Andreessen Horowitz, backed MKR with their own investment.
Per previous reports from this very outlet, Jon Jordan of DappRadar, a service tracking information about blockchains, said to us in an interview:
Depends on how you define ‘killer dapp’. DeFi certainly is the first category of dapps to attract significant amounts of value (both ETH and ERC20 tokens). In terms of wider issues such as user numbers, however, it’s not clear DeFi will attract millions of users. But, yes, DeFi is the first killer dapp category on Ethereum.
This has been echoed by a Coinbase Product Manager who recently tapped the segment of blockchain applications, saying the following on the importance of DeFi in today’s crypto environment:
“DeFi is an opportunity to build financial infrastructure that spans the world, is open to everybody, and starts to change how we interact with markets.”
Featured Image from Unsplash
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of EWN or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.