The VC Community is Getting DeFi-Savvy

USV's decision to hold DeFi tokens directly is the start of a wider trend in VC & drives the need for institutional-grade DeFi enabled custodians.

New York-based Union Square Venture expects to inject a notable fraction of its freshly minted fund into the crypto space - 30% of new USD$250M Fund.

This was the recent news that hit the scene in crypto markets week commencing 24 January 2021 via Coindesk which signals that the firm's planned investments "will include holding tokens directly as well as equity in early-stage blockchain-related projects." Their view is that the world is changing innovatively and in a more rapid manner as new tech startups aim to become tech unicorns with game-changing product offerings.

Decentralized finance keeps hitting new highs in its most popular metric, total value locked which has now reached over UD$25B. But there’s another, lesser-known milestone it also reached back in September 2020 and that was that DeFi projects crossed half a billion dollars raised in venture capital funding. The 34 DeFi Companies listed on DeFi Pulse have together raised just over $500M from more than 100 VC funds.  According to the Defiant, from 2018 onward, VC-led funding has increased in DeFi.  With USV now taking active participation in holding tokens directly could be the start of a new trend with VC firms generally. 

This is exciting news for DeFi enabled crypto custodians like Trustology as it indicates a potential new trend with venture capital firms and a need to ensure security and custody of their investments in this budding ecosystem.

As a first to offer a new set of security controls in DeFi to institutional participants through its DeFi Firewall, and a first to integrate with MetaMask and now WalletConnect, Trustology is advantageously and uniquely positioned to support institutional growth in the decentralised finance ecosystem.  DeFi protocols are powered by smart contracts, or blocks of code that are executed automatically on the Ethereum network, cutting out trusted third-parties or middle-men that would otherwise take a cut of the earnings from a financial instrument. Smart contracts allow DeFi protocols to offer superior returns to individual users, but also introduce risks.  With DeFi’s liquidity mining opportunities driving adoption and demand, investors from a more traditional or institutional background want some of this action. At the same time, they have to be able to show that funds are being managed in as prudent a fashion as possible.  By enforcing protocol agnostic smart contract safeguards like allow and deny lists, users gain more control over where their funds are allocated to.  Trustology is ensuring its users extra added security and peace of mind in conjunction with its end-to-end hardware secure custody infrastructure.  Private keys are managed in its programmable Hardware Security Module (HSM) network with proprietary firmware and stored in secure data centres with multiple encrypted backups and robust backup key recovery service.

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