What is the difference between altcoin and Bitcoin? A confirmed Twitter account, a token distribution to insiders, or a founder who reveals his identity? Can altcoin’s “Foundations” and “Labs” hosts as a whole also be a factor? What about the blessings of angel investors? Or all of the above?
Crypto and DeFi projects rely heavily on venture capitalists and angels to provide support systems that help emerging projects look more legal, as well as money. Who are you looking for? Countless small investors looking for autographs from above.
From notable players like Solana to niche experiments like World Coin, powerful VCs hold different parts of the ecosystem that many enjoy calling “distributed”, and even more. Engrave
The distribution of tokens is important in deciding the distribution of power on the blockchain.
Concentration of insider ownership can permanently undermine the ability of a project to become a reliable and neutral public infrastructure.
The oligarchy is a system that we think is confusing.
— Ryan Watkins (@RyanWatkins_) May 17, 2021
But the problem is-when do crypto investors know that things are going too far?
The Godfather, be my friend
Journalists tend to focus on numbers when strong investors report on cryptocurrency funding rounds and ICOs that weigh behind early projects. But in doing so, they miss other forms of currency: the attention, legitimacy, and approval of the press.
A good example – Solana’s Series A funding round was led by Multicoin Capital, raising $ 20 million with five or more other key participants. Kyle Samani, co-founder of Multicoin Capital, said in a statement:
“We are very proud to be able to lead this round. We encourage developers around the world to seriously consider Solana.”
In less than three years, Solana is the fifth largest cryptocurrency by market capitalization, surpassing both XRP and Cardano’s ADA. Still, Solana is controversial thanks to the distribution of tokens. In the distribution of tokens, most of the first coins were seen. Assign to Insider, According to Messari Research.
So what happens when the VC model is stretched to the extreme? One of the many answers to this question is Worldcoin. This crypto project aims to distribute crypto to everyone in the world only after scanning the eyes of the recipient. As expected, the rebound was swift and the project was even accused of being a Ponzi scheme, thanks to its multi-level operating model.
But one thing sets Worldcoin apart from the thousands of crypto experiments that temporarily flicker before it disappears into the void.
With supporters such as Coinbase, Three Arrows, and FTX billionaire founder Sam Bankman-Fried, it’s much harder to dismiss a biometric data acquisition project using an agent that uses its own orb. is.
One of the critics of the fake altcoin support model is Edward Snowden, an NSA whistleblower and privacy advocate.he declaration That large VC makes it possible “Centralized Garbage Coin” Where they invested.
There is a line of wealthy VC-guys who pretend to favor you by “warning” Bitcoin (or whatever) while hype about centralized garbage coins.
Even if you accomplish it, don’t be that guy. If you are the man, change.
-Edward Snowden (@Snowden) November 21, 2021
Offer that cannot be refused
During the episode Unusual core Co-founder of the podcast, Three Arrows Capital SuZhu Worked on both sides of the centralization debate. In support of VCs, Zhu pointed out that developers have to pay and smart contract audits are usually expensive.
On the contrary, executives acknowledged that venture capitalists do not always support innovative innovation. He explained,
“… The problem with that VC space is that there is a lot of group thinking, right? Where in Andreessen? [Horowitz] When you make one transaction, everyone wants to make the same transaction and leads all the transactions, but they are all the same. “
Zhu also argued that major VCs were co-investing in Coinbase before suggesting that Coinbase listed VC tokens for the same reason. Calling it “dangerous to space,” Zhu looked back.
“So did it suppress DeFi? Yes, it couldn’t take the risk, so it suppressed DeFi a lot. I can’t put out a project to solve the use case. They said,” How do you crystallize? You have to think about “do you do it?” How do we sell high? How would you like to use this to place it in PowerPoint for the next fund? “
It is worth noting that at the time of the press, Three Arrows Capital listed Multicoin Capital as one of its investments. Three arrows also reportedly invested in World Coin.
Worldcoin confirmed a $ 25 million private funding round with a $ 1 billion valuation. @ a16z, @coinbase, @coinfund_io, @DCGco, @hashed_official, @multicoincap,Three arrows, @variantfund, @ 1 Confirmation I’m among the investors. https: //t.co/EaBwHuJ3P7 pic.twitter.com/jzn5KZeap4
— ICO Analytics (@ICO_Analytics) October 23, 2021
Take a gun and leave the capitalist
But the crypto support model goes beyond angels and funding rounds-even honorary positions are important. An example of this is the icy musk vs. Zhao Twitter spats. When Binance suspended the withdrawal of the DOGE network for a few days, Elon Musk of “Doge-father” asked Binance CEO Changpeng Zhao and called the situation “shade.”
In the next few hours and days – Zhang replied, Binance released the latest information for DOGE traders, and Zhao published an apology message.
More importantly, this little drama showed that DOGE investors have social media-savvy vilionaires in the crypto sector, and even in decentralized systems worldwide.
I’m really happy to see @elonmusk Stand up for a little guy here – Dogecoin holders whose funds are stuck on the exchange because the exchange made an error
Also, a lesson for everyone: maintaining cryptography in uncontrolled exchanges is very dangerous ~ https: //t.co/rF5Ejsqwfi
— Shibetoshi Nakamoto (@ BillyM2k) November 23, 2021
Musk may not have led the funding round or announced an official release, but it can be argued that his actions had an impact comparable to the official VC who did these things.
Keep your friends close
Like organ transplants, the cryptocurrency VC will do its best to succeed in new but rapidly changing systems. As in the case of Solana, we have a success story when they push a new project to a dizzying height.
However, if, despite abundant support, the suspicious system does not come up already, you may have no choice but to call the time of death. And it casts doubt on VC’s unethical “groupthink.”
As long as both formal and informal VC support models exist, investors will need to use a research scalpel before cryptocurrency wallets.