a16z’s Crypto Fund Buys Up 6 Percent of MakerDAO’s MKR, Will Support
The crypto arm of venture firm Andreessen Horowitz, a16zcrypto, have announced their purchase of six percent of the total supply of MakerDAO’s proprietary token, MKR. The buy-up came at $15 million USD. Accordingly, the MakerDAO team will now receive operational and capital support from a16z.
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a16zcrypto Pegs MKR as Part of Its Future
Decentralized financial ecosystem play MakerDAO has taken its latest step toward the mainstream in its fresh backing from the new crypto fund at a16z, a reputable VC firm that’s previously made early bets in Skype, Airbnb, Coinbase, Ripple, Medium, OpenBazaar, and more.
Toward what’s been characterized as a “strategic purchase,” a16z’s General Partner Katie Haun, who previously headed up U.S. Department of Justice investigations into both the federal government’s rogue Silk Road agents and the Mt.Gox hacks, led the MKR buy-up. a16z will now be a considerable player in the governance of the MakerDAO ecosystem, which began with the Dai Credit System.
It’s an adoption-aimed milestone for the MakerDAO team, as they’ll be poised to take their decentralized visions even further with capital and operational support from the VC firm. Now, a16z’s various departments will lend concerted developmental and technical support to the stablecoiners.
For her part, Katie Haun hailed the pivot to MakerDAO as a “very compelling” opportunity:
“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.”
On the Dai
With so many stablecoins on the scene today, there are more than a few models to choose from. The Dai works idiosyncratically, of course, though its core crux is the same as its peers: to provide mitigation to large value fluctuations in the cryptoeconomy.
Specifically, Dai is issued on the Maker Platform and uses a “dynamic system” of Collateralized Debt Positions, or CDPs, via smart contracts on Ethereum. The Dai’s value is stabilized by MKR in a dual-token model.
This particular system allows Maker users to hedge ether (ETH) in order to take out Dai, essentially in the manner of a self-loan.
In July 2018, MakerDAO joined forces with supply chains payments powerhouse Tradeshift on “a project to unlock liquidity access for small businesses around the globe from the $9T of capital trapped in outstanding receivables.”
The team-up will see the aforementioned Dai Credit System used to “establish a supply chain liquidity marketplace for businesses, developers and investors,” MakerDAO and Tradeshift announced at the time.
The Dai Credit System will first be piloted in Tradeshift Cash, an invoicing solution for micro-to-medium enterprises.
A New Precedent?
DTC Capital’s Spencer Noon pointed out earlier on Twitter that the a16z and MakerDAO meld could set new precedents in the fledgling cryptoeconomy.
This establishes early precedents for:
(1) teams selling to strategic investors in secondary transactions
(2) the cost of operational support from a top-tier VC firm https://t.co/GeoSKI7Jm7
— Spencer Noon 🕛 (@spencernoon) September 24, 2018
Noon suggested that the deal could see “secondary transactions” to strategic investors gaining traction and pretty-penny discounts expected by VC firms in future similar agreements.
Have you ever used MKR before? What was your experience? Do you have a preferred stablecoin? Let us know on Twitter.
Images via Pixabay, MakerDAO, a16z