Venture Capital Giant Injects Millions into Ethereum DeFi Startup: Good for ETH
Over the past few months, Ethereum, the second-largest cryptocurrency and blockchain by market capitalization, has been seeing a Cambrian explosion in its decentralized finance (DeFi) sector. This hasn’t gone unnoticed.
Case in point, a leading venture capital giant in Silicon Valley has backed DeFi application Compound, long one of the most popular Ethereum-based protocols in the digital asset ecosystem.
Legendary VC Firm Backs Ethereum Startup
On Thursday, Fortune revealed that Compound — a decentralized platform that allows users to lend out and borrow Ethereum-based assets like ETH itself, USD Coin, Basic Attention Token, and 0x — has secured a $25 million worth of investments from Andreessen Horowitz’s a16z (round leader), Paradigm, Bain Capital Ventures and Polychain Capital.
Compound CEO Robert Leshner explained that his company’s goals will be to be integrated “with crypto exchanges, custodians, and wallets by the end of 2020, Leshner says. This means ordinary consumers could soon be able to use a service like Coinbase or Kraken to lend out their cryptocurrency.”
A16Z Going Big on DeFi
It seems that a16z is going big on decentralized finance, boding well for Ethereum’s future prospects.
For those who are unaware, Maker, a relatively new, yet well-established project, offers the first fully-fledged decentralized stablecoin, named DAI, which is backed by a system that has the first “formally verified smart contracts on Ethereum (or any blockchain, for that matter).” Katie Haun, a General Partner and co-founder at a16z crypto, explained the investment:
As a first mover and innovator in stablecoins, MakerDAO represents a very compelling opportunity in the crypto space. MakerDAO’s technology, ecosystem and talent have put theory into action to deliver a decentralized stablecoin that we believe will help drive the future of the crypto economy.
Along with this token purchase, MakerDAO will reportedly receive operating capital for the startup’s next growth stage, three years of financial support for the MakerDAO community, “and most importantly, full operational support from the 80+ person Andreessen Andreessen Horowitz a16z team.”
Also, just a few weeks back, an address linked to the firm acquired Synthetix tokens valued at some $235,000 at the time. This purchase pushed the price of the altcoin higher, allowing it to surmount Compound as the second-largest DeFi protocol.
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.