Andreessen Horowitz a16z Crypto Fund Buys 6% Of Maker Supply, Backs Stablecoin Project Vanguard MakerDAO
U.S. based private venture capital firm Andreessen Horowitz has increased its exposure in cryptocurrencies, backing theMakerDAO’s Dai stablecoin project with a $15 million investment.
U.S. based private venture capital firm Andreessen Horowitz has increased its exposure in cryptocurrencies, backing the MakerDAO’s Dai stablecoin project with a $15 million investment.
Andreessen Horowitz backs the Maker project
Renowned private venture capital firm Andreessen Horowitz has announced an investment of $15 million in MakerDAO’s Dai stablecoin from its newly-formed dedicated crypto fund, a16z crypto.
a16z’s crypto published a Medium post announcing the investment of $15 million into the Maker blockchain project using the Maker’s Ethereum-based token – the MKR.
“Andreessen Horowitz invested $15 million through a16z crypto, a crypto fund launched in June that’s now worth $300 million. The fund has made investments in a number of crypto and blockchain startups in its four months of existence including decentralized data platform, Oasis Labs, and blockchain-based cloud computing platform, Dfinity.”
According to the publication, the $15 million investment sees a16z crypto acquire 6 percent of the total circulating supply of the MKR token, which will give the VC firm the right to govern MakerDAO and the Dai Credit System.
The Vanguard Dai Stablecoin
The last few months have seen an increased number of stablecoins enter the crypto market as companies look to bring stability to crypto trading, and stymie investor backlash complaining of volatility.
Dai is an asset-backed virtual currency. Like Tether (USDT), the Dai token is soft-pegged to the U.S dollar and backed by Ether held on the Ethereum blockchain.
There are currently 55 million Dai tokens in existence, and Dai tokens will have to compete with the likes of Tether, TrueUSD, and other already established stablecoins.
According to Maker, the Dai token is the first fully-fledged decentralized stablecoin. Maker claims that the Dai token is backed by a system that has the first “formally verified smart contracts on Ethereum (or any blockchain [for that matter]).”
Built on Ethereum’s blockchain, Dai tokens use a smart contract protocol to gives users the ability to create new tokens using Ethereum tokens (ETH) as collateral.
In the Dai ecosystem, there are incentivized market makers whose function is to liquidate loans if they speculate that the tokens are becoming under-collateralized, and ensure that all excess Dai tokens are removed from circulation.
Andreessen Horowitz’s investment in a stablecoin
The investment of Andreessen Horowitz defies conventional investment patterns. Investors and firms usually invest in projects that would bring returns, and that doesn’t seem to be the case with Dai.
According to the renowned venture capital firm, investing in a stablecoin is in line with a16z crypto’s model focusing on non-speculative assets rather than the traditional digital currencies.
The VC firm has explained that stablecoins could be critical to the development of the cryptocurrency industry.
Haun, who recently joined Andreessen Horowitz, has stated that stablecoins will play an essential role in bringing institutions that have avoided cryptocurrencies into the nascent industry.
Regardless of the longstanding downward trend that has plagued the cryptocurrency market, Andreessen Horowitz explains that his crypto fund is “all-weather”.