The MakerDAO project has received a sign of strong support from famed investment firm Andreessen Horowitz. The American venture capital firm has invested $15 million dollars in the project. This virtual currency project is known for its stable coin, which adjusts the supply of coins algorithmically to keep their value.
Andreessen Horowitz Invests in MakerDAO
There are hundreds, if not thousands, cryptocurrency projects in the market. Nonetheless, Andreessen Horowitz decided to invest in MKR tokens through its $300 million crypto fund known as a16z. With this purchase, a16z has acquired the rights to govern MakerDAO and its Dai Credit System. In this way, it becomes the first decentralized autonomous stablecoin organization in the market.
Using smart contracts that run on the Ethereum blockchain, the Dai Credit System aims to handle a decentralized stablecoin. Its ecosystem creates a token when people collateralize their assets and secure a loan. In this way, Dai becomes the central virtual currency of the platform.
a16z commented about how the platform works:
“A set of autonomous smart contracts coordinates and runs the Maker system, which means that anyone with an internet connection and collateral can create Dai without the need for trusted intermediaries. To ensure the system remains solvent, a network of market makers is incentivized to liquidate loans that risk becoming uncollateralized, thereby removing excess Dai from circulation and keeping the balance of Dai to collateral in check.”
At the same time, Katie Haun, general partner at Andreessen Horowitz, said that the economy of the future belongs to decentralized stablecoins. Haun is known in the industry after working in two high-profile cases in the crypto space. She has also said that MakerDAO is a first mover and innovator in the stablecoin industry.
Haun shows she is very confident about the MakerDAO project because it provides price stability. Virtual currencies are currently very volatile and this is not positive for the market.
There are other stablecoins launched by recognized companies. For example, the Gemini cryptocurrency exchange launched the Gemini Dollar (GUSD). This currency backed by the Winklevoss twins has been already accepted in several exchanges. With it, they aim at reducing volatility in the market.
Circle, the company behind the crypto exchange Poloniex, has also unveiled is own stablecoin Circle USDC. It will have different use cases and will be embraced by different companies in the crypto space.
Andreessen Horowitz has previously invested in other crypto-related projects. The startups CryptoKitties and OpenBazaar received support from the American venture capital firm.
Carlos is an international relations’ analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.