[ad_1]
Tech-focused venture capital giant Andreessen Horowitz (a16z) has invested $100 million in Ethereum-based EigenLayer, suggesting that crypto venture funding could be on track for a recovery.
As Bloomberg reported on Thursday, a16z was the sole backer in the funding round, which marks by far the largest investment ever received in EigenLayer.
Recovery with EigenLayer, explained
The second-largest investment in the platform was a $50 million raise in March in a funding round led by Blockchain Capital, a company that has also backed platforms like Coinbase, Kraken, Aave and OpenSea.
EigenLayer is a decentralized Ethereum “takeover” protocol, allowing users to reuse their already staked ETH to secure Ethereum sidechains as well. These sidechains may have different scalability and development properties than the base layer of Ethereum.
“This will enable all kinds of new types of applications,” said a16z partner Ali Yahya in an interview with Bloomberg. “People will invest capital in order to get rewards from new services built on top of EigenLayer.”
Ethereum introduced staking in September 2022 and has since become the most dominant proof-of-stake blockchain in history. According to Etherscanover 39.6 million ETH is now staked on Ethereum, representing economic security worth $118 billion at current prices.
The inherent security of Ethereum
“The idea is that when you stake Ethereum, you are promising that you will properly run the nodes on the Ethereum network,” said EigenLayer founder Sreeram Kannan, a former associate professor at the University of Washington.
In exchange for locking their ETH, stakers receive periodic payouts based on the network's ETH. Data from ultrasound.money suggests that current rewards offer an APR of around 3% in terms of ETH.
“With re-refresh, you are taking the same Ether and making additional promises that you will also properly validate other networks,” Kannan continued.
He added that EigenLayer offers a points system for those who reuse its platform, but they still have no plans to launch a native token.
A16z has raised a massive $4.5 billion crypto fund in 2022. General partner Chris Dixon confirmed that the company is still looking for crypto investments ahead of the 2024 presidential election.
Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off fees on Binance Futures for the first month (terms).
[ad_2]
Source by [author_name]