ConsenSys Co-Founder Announces $100 Million Ethereum Fund

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Andrew Keys, a co-founder of ConsenSys Capital, has joined DARMA Capital as a managing partner to help usher in Wall Street money to Ethereum. Keys has departed ConsenSys to focus on DARMA full time, as reported by Bloomberg, June 6, 2019. 

Pushing Institutionalization

Digital Asset Risk Management Advisors (DARMA) is a fund whose goal is to provide investors with alpha generated from investments in Web 3.0 protocols. The flagship fund is a 10-year long strategy that focuses purely on Ethereum. Investment decisions are taken to capture the massive price swings and optimize portfolios based on future outlook. The fund claims to have sold ETH at the top and bought back near the bottom, effectively ending up with 2500 ETH for every 1000 ETH they held before 2018.

DARMA wants to launch similar funds for Bitcoin and Filecoin, to help bring in a wave of institutional adoption. While some see this as a negative for Bitcoin’s proposition of being peer to peer cash, this enhances the store of value narrative that most of the community agrees with.

Ethereum saw a near 18,000 percent surge before retracing 94 percent and wiping out most of its gain. While Bitcoin only fell about 80 percent, Ethereum’s gains were also much higher than Bitcoin, making a harder fall during a bear market imminent.

With regulatory scrutiny still very much a valid concern, the use of these systems by companies with strong political lobbying power like Amazon, Google, and Microsoft increases the chances for regulators to have a positive outlook on Ethereum.

Ethereum Ahead of the Corporate Curve

While most cryptocurrency projects try to legitimize themselves with institutional partnerships, Ethereum has flown ahead of its competition to be the leading development ledger used by most large companies.

While Ernst & Young and J.P. Morgan are using permissioned forks of Ethereum, Microsoft and SocGen have adopted the Ethereum public ledger for their own purposes. The launch of a Web 3.0 development kit on Azure puts Microsoft at the forefront of Ethereum adoption; SocGen issued over $100 million in bonds using the Ethereum public blockchain.

There are a few pitfalls: If ETH is mostly held by institutions, these entities will wield a colossal amount of power when Proof-of-Stake (PoS) goes live, possibly centralizing control of the network. If they don’t stake it and simply lock up their ETH, which is a possibility depending on the required lock-up period for staking, the use of ETH within the network would dwindle and it would slowly turn into a pseudo equity token from a utility token.

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