Chris Dixon is a general partner at Andreessen Horowitz. Michael Nagle—Bloomberg via Getty Images
Venture capital firm Andreessen Horowitz (also known as a16z) has announced a $100 million investment in EigenLayer, a startup that facilitates the restaking of cryptocurrencies.
So what actually is restaking? It is the process of reusing deposited or staked ETH tokens as a means of securing the main Ethereum blockchain. When a validator stakes a token, it signifies a commitment to the security of the network.
“They have already built up some economic capital and have made a commitment on Ethereum that they will not violate the governance of the protocol, or they will lose their right to a role in the protocol,” said founder and former University of Washington Professor Sreeram Kanan explained. luck. “EigenLayer provides a universal, decentralized verification marketplace.”
Founded in 2021, EigenLayer provides a mechanism for developers to deploy the protocol on top of Ethereum's existing node operator infrastructure, which allows for significantly more flexibility, Kannan added. “I think that's why Andreessen bet on us.”
Ali Yahya, a16z general partner, wrote in the company's blog post: “We are excited to partner with Sreeram and the entire team in building a platform that unlocks a new dimension of open innovation on Ethereum.”
Silicon Valley powerhouse a16z has recently raised a $4.5 billion cryptocurrency fund, making it a hot topic in the space, signaling a reversal of waning interest in Web3-related venture capital investments. There is a possibility. VC funding for cryptocurrencies increased by 2.3% in the final quarter of 2023, after declining since the beginning of 2022, according to a report from private market data analytics provider Pitchbook. Although a small percentage, the funding could be welcome news for startups in the coming quarters. ”
A potential roadblock to Eigenlayer could come from Securities and Exchange Commission Chairman Gary Gensler, who told crypto companies last March that digital assets using staking protocols are He said it could be considered a security under federal law, The Block reported.
Retail investors are expecting returns on these “proof-of-stake tokens,” and “we're going to see returns of 2%, 4%, 18%,” Gensler said at the time. “What I would suggest is that each of these token operators strive to be compliant, and the same goes for intermediaries.”
But Kannan said he wasn't too worried about such headwinds, saying, “We're nowhere in the same zone,” and that his company is developing a new protocol for creating additional staking tokens. to Ethereum, which he said completely eliminates the need and instead just relies on existing economic commitments that have already been made.
“This will allow more developers to participate in the crypto economy and eliminate the need for each developer to worry about how to build a new decentralized economy around crypto.” he says.
