Uniswap, Synthetix, and over 20 DeFi Protocols Receive Investment from Venture Capitals
More venture capitals (VCs) are now finding themselves sifting through open finance projects in various smart contracting platforms, searching for investable gems.
Venture Capitals: “DeFi is too irresistible”
Ironically, their participation in the very projects that will dismantle traditional finance appears to be the antithesis to everything they stand for. Some observers now say VCs are going out of style.
Yet, this is where they find themselves. The crypto and blockchain movement is too strong, yields too lucrative, and projects very potent to by-pass.
Synthetix Raised $12 Million in a Round Led by 3 VCs
On Feb 14, Synthetix–one of the most popular DeFi protocols managing over $2.5 billion of user assets, said it had raised $12 million in a funding round led by Coinbase Ventures, Paradigm, and IOSG.
The three crypto-focused VCs purchased SNX tokens directly from the DeFi protocol’s decentralized Autonomous Organization (DAO) treasury. Their decision now gives them a voice in the platform’s governance.
Typically, a DAO has no hierarchical structure, and token holders are often in charge of proceedings in the spirit of decentralization.
In a statement, the VCs will help propel Synthetix forward by providing assistance in talent acquisition, marketing, and awareness campaigns in China and coordination. Presently, the trustless derivatives trading platform is preparing for Layer-2 staking and trading.
Jordan Momtazi, a core developer for the Synthetix DAO, said:
“Having the sharpest minds applied to the hardest problems is part of the community’s success, and we look forward to working closely with these new stakeholders.”
Uniswap Founder: Demystifying the VC Propaganda
However, it is not Synthetix alone that has received funding from VCs.
Hayden Adams, the founder of Uniswap, said that the protocol received a capital injection in its formative days.
Despite contrary beliefs, he explained, their participation—in their defense, is positive and symbiotic, adding value to the project.
Are VCs Bad for DeFi?
Their involvement, nonetheless, has sparked heated debates. Many complain that VCs get preferential treatment. In their view, DeFi projects have measures to guarantee fair launches, of which VCs seem not to comply with these laid down rules.
While some objects, DeFi projects are open source. As such, VCs can freely invest. However, they must adhere to underlying principles of decentralization and disintermediation for members’ voices to be heard.
Currently, DeFi as an emerging sphere is still nascent. Consequently, VCs are picking opportunities to stay ahead of the curve. It explains the in-exhaustive list of VCs that have sunk billions across various financial dApps, securing and holding high ROI tokens.
As long as DeFi opens up new opportunities, resolving long-standing problems, more VCs will take their chances. More are investing more than what ordinary retail investors would, considering DeFi are public projects.