The Merkle

Cryptocurrency Trading Firm Polychain Capital Secures $10 Million in VC Funding

One of the first Coinbase employees, Olaf Carlson-Wee, founder of a trading firm specializing in digital assets, has managed to secure $10m from investment firms A16z (Andreessen Horowitz), Boost VC, and Union Square Ventures, among others.

Digital Assets, like Bitcoin, Ethereum, Ripple, and many other so-called “altcoins” are very volatile investments, but Olaf Carlson-Wee believes his recently created firm, Polychain Capital, has what it takes to sail through dark waters:

I think these tokens are very important; they directly monetize the open-source founders and founding teams at a protocol level. We’ve already seen many founders of blockchain networks get rich based on their creation.

With this statement, the founder of Polychain Capital explained the reason why he is investing in blockchain-based assets. In the past year, the “crypto sphere” has experienced a shift from traditional altcoin developments towards a Crowdsale or ICO (Initial Coin Offering) approach.

With ICOs, the developers essentially seek to get funding from the public by promising to build a decentralized network to fill a niche or use case. This year, many ICOs were launched, raising as much as $200m in total (data via Coindesk). The year 2016 was tainted by The DAO debacle, a badly written smart contract (holding $150m) which was abused by an unidentified actor, resulting in the theft of millions of dollars.

Polychain Capital’s CEO expressed his intentions of investing in decentralized technologies to build a better web:

I’m trying to take a position very early on in projects that I believe could truly become the infrastructure of the future internet, or app tokens that could disrupt major centralized web services.

Although the entrepreneur didn’t disclose which projects his firm has been investing in, some have speculated that the company may have taken positions on several Ethereum-related technologies.

The company seeks to open the doors for traditional Venture capitalist firms to invest in cutting-edge technologies and protocols.

There will be many types of assets codified into the blockchain, and they are all not just going to be on the bitcoin blockchain–it’s going to be a number of different assets here. And the best way to invest in that is a diversified portfolio.

Polychain Capital will have to carefully assess which projects to invest in. Some argue that ICOs are outright illegal. Preston J. Byrne, Lawyer and Counsel for Monax Industries, said:

When someone is selling a coin, . . . this means that someone is trying to get money very quickly from unfussy, unsophisticated investors who are grateful for the chance to get in on the ground floor of the “next big thing.” Someone selling you a coin is bootstrapping their business with your money, and may very well be giving you jack squat (no stake) in their business in return.

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