Following the money Part II…

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Oct 27, 2018

So why does any of this information matter? Surely not all venture capital funded projects become the next Reddit, Twitter or Uber. Equally as important to note is that just because a VC participates in a series funding round, it does not mean they are guaranteed to remain involved. In fact part of the goal is generally to find a profitable exit, just as one would with any investment vehicle. Yet interestingly enough, by design VC’s help start-ups to establish business networks which in turn can help them grow, thus enhancing the valuation. Such funding comes with strategic advice, assisted marketing development and the providing of valuable connections. Venture capital makes true the old adage, “It’s not what you know, it’s who you know.” With that said, here is a quick follow up to my previous insight.

Now it is known for certain the direct interest in 0x protocol (ZRX) that Andreessen Horowitz, Polychain Capital and many past/present Coinbase employees have had. Presently it is easy to see that the results of Coinbase listing ZRX has widened its exposure and therefore elevated speculation as to its uses, causing value to increase. Seems like some pretty solid networking if you ask me. Additionally, some of those same individuals and or entities who are vested in ZRX have also participated in funding MakerDAO. Could there be a connection somewhere?

*Coinbase announced the listing of ZRX on October 11th, notice the large spike in transaction volume, followed immediately by a surge in daily active addresses. Then of course the large increase in price.

Well, let me introduce you to software engineer Antonio Juliano, the founder of ‘dYdX,’ a freshly funded decentralized protocol for p2p margin trading and derivatives of erc-20 tokens. Quite an exciting notion should execution and whitepaper align as planned. All that aside (though I strongly urge those interested to dig deeper) what I find curious is that Antonio Juliano’s former employer is none other than Coinbase. Maybe there is a pattern here, hard to say for sure though…Going even further down the rabbit hole one can easily discover that dYdX will implement 0x protocol. That is the same 0x protocol which two former Coinbase employees and one co-founder have had or have advisory positions with. Funny too that one of those former colleagues also co-led the two funding rounds for dYdX through his investment firm, Polychain Capital. I think we can all agree that it’s good to know people who know people.

As for the yet to be named co-lead who helped organize dYdX’s funding as well, that would be Chris Dixon, General Partner of Andreessen Horowitz. Chris Dixon heads AH’s $300M a16z crypto fund, working alongside Katie Haun who is a General Partner at AH as well. Both have seats on Coinbase’s advisory board, both helped co-lead MakerDAO’s funding round which of course Polychain capital participated in. Impressively enough, dYdX also managed to garner seed funding from angel investors and former bosses Brian Armstrong and Fred Ehrsam and former co-worker Linda Xie. I think we can all agree, its good to work at Coinbase.

*A very noticeable uptick in social volume following the news of a large scale acquisition of MKR tokens. Even more noticeable is the cost per token nearly doubling over the next few weeks.

The last notable dYdX investor, but certainly not least, is Dragonfly Capital Partners. A newly formed crypto focused fund made public the same day as dYdX’s last funding round was announced. Dragonfly Capital Partners is a $100M fund devoted to protocols, dapps and ecosystem driven tech start-ups. The funding for this fund comes from the following sources just to name a few; Marc Andreessen and Chris Dixon of Andreessen Horowitz, Olaf Carlson-Wee of Polychain Capital, OKEx, Bitmain, Craft Ventures (whose founder, David Sacks also sits on the 0x board) and Bain Capital Ventures.

To be clear, none of what is stated above should be viewed as accusatory or by any means negative information. As explained in the beginning, Venture Capital funding serves a very specific purpose, not all of which is always obvious just by following the money. The projects discussed are, in my opinion, forward thinking and promising. If you wish to see the dYdX protocol in action I suggest you head over to Radar Relay’s educational site where you can learn all about how to short ether, all you’ll need is an ethereum wallet and…DAI tokens. As for now, that is definitely enough information for one sitting. I’ll leave the connecting of the dots with MakerDAO to those curious enough to dig a little on their own.

*Interesting to see the correlation between MKR and ZRX and they both continue to move seemingly uncoupled to BTC and or ETH.

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Oct 27, 2018

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