Synthetix decentralized trading platform has raised $ 12 million from venture capital firms Coinbase Ventures, Paradigm and IOSG. The increase appears to be a rare occurrence where VCs invest directly from their treasury by purchasing a platform’s native token rather than transferring funds to their founders.
Synthetix is operated by a DAO or a decentralized automated organization so that a project can control itself without a traditional corporate structure. Token holders are usually asked to vote on the direction the DAO will go.
In the case of Synthetix, a platform where users can trade synthetic assets and commodities, including Brent Crude Oil Future, users can create these novel assets using the platform’s native Synth token (SNX). The application has become a key component of decentralized finance (DeFi). Around 2.8 billion US dollars worth of crypto is “blocked”.
“We are excited to support synthetixDAO in building the leading platform for synthetic assets,” said Arjun Balaji, investment partner of Paradigm, in a press release. “Synthetix has one of the best communities in Crypto and we’re happy to be a part of it.”
There is some debate over the role of venture capital in DeFi, with some commentators suggesting that these companies could have a distorting effect on supposedly public protocols. That view came to a head this summer with the advent of the self-styled community-driven SushiSwap protocol, an offshoot of VC-backed Uniswap.
Uniswap founder Hayden Adams recently spoke about the “mutually beneficial experience” between venture capital and DeFi, denying claims that Uniswap’s supporters were “extractive”.
In addition to providing liquidity for the log, the VCs are reported to be helping Synthetix recruit talent and plan the next upgrade. Cointelegraph reported the news first.
According to Messari, the SNX is roughly 4% down on the day and 10% down from the local high.
