- Synthetix said top VC firms Paradigm, Coinbase Ventures, and IOSG invested in the project.
- The three firms purchased $12 million worth of SNX tokens from synthetixDAO’s treasury.
- The latest funding indicates growth efforts by onboarding liquidity partners who can also act as valuable ecosystem members.
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Synthetix, a DeFi project for synthetic assets, announced that it raised $12 million from Paradigm, Coinbase Ventures, and IOSG.
VCs Enter DeFi Governance
The three venture capital firms invested by purchasing SNX tokens worth $12 million from SynthetixDAO’s treasury.
The funds will be used as collateral to provide liquidity as well as to participate in the Synthetix platform’s governance.
— IOSG Ventures (@IOSGVC) February 14, 2021
The latest funding indicates growth efforts by onboarding valuable liquidity partners in the Synthetix ecosystem.
Previously, Synthetix founder Kain Warwick reported that synthetixDAO surpassed $1 billion in treasury holdings and now earns more monthly fees (~750k USD) than it spends.
This means that the project is cash-flow positive on protocol fees alone and there is no shortage of funds.
SNX token sales as a form of funding are not a recent phenomenon. Framework Ventures purchased 5 million Synth (SNX) tokens in 2019 from the project’s treasury to participate in the protocol.
Role of Vcs in Defi
As of late, bringing venture capitalists on board has become a sort of debate topic among the decentralized finance (DeFi) space.
The argument is that giving preferential treatment to VC firms in token sales may go against the ethos of community-driven DeFi.
Others say VCs can play a huge role in helping projects in the DeFi space expand using their vast resources.
According to Hayden Adams, founder of the…