A16Z’s way of making money: Investing in stablecoins is like getting high-return dollar savings from the bank
Recently, Andreessen Horowitz (A16Z), the most well-known traditional venture capital firm in Silicon Valley, invested $15 million in the stable currency network Maker.
Stablecoins are also a type of cryptocurrency whose value is kept stable by hedging the price of fiat reserve currencies such as the U.S. dollar. Syllables, Dai, the stablecoin within the Maker ecosystem, is always pegged 1:1 to the U.S. dollar, no matter how the prices of Bitcoin and Ethereum (ETH) fluctuate.
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Earnings Return and Buyback Program
A16Z's investment in MKR is conceptually similar to depositing U.S. dollars as savings in U.S. banks—that is, after they deposit a certain amount of funds in banks such as Goldman Sachs or JPMorgan Chase, they will be based on the funds provided by the banks. Plan to earn returns monthly or annually.
By taking money from their own customers, banks can then lend the money to trusted businesses and individual investors who pay high interest rates to customers who provide the banks with seed capital.
Due to the unique structure of the Maker blockchain, A16Z gaining control of 6% of their network allows them to see the future "at least" in line with the return of deposits in banks, which is a return of interest, or based on Income capture model based on the annual percentage rate of the market value of the investment.
Dai is a stablecoin that exists on the Ethereum blockchain operated by Maker. The Maker blockchain platform also includes an important component called "Maker (MKR)", and the main function of this component is to lend the stable currency Dai to investors who use Ethereum (ETH) as collateral.
Investors would send ether to an escrow account embedded in a smart contract, and in return they would receive Dai, a stablecoin pegged to the U.S. dollar. Then, when the debtor "repays the debt" to the MKR holder, the MKR token holder can obtain high interest (that is, similar to the loan interest rate); When someone borrows U.S. dollars, those MKR holders will pay interest to the Maker network, and then the Maker network will destroy some MKR tokens, pushing up the price of Dai by reducing MKR tokens, and ultimately ensuring Dai’s Prices remain stable.
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The possibility of a collapse in the value of the stablecoin Dai is not high
Katie Haun, general partner at Andreessen Horowitz Ventures, explained that the Dai and Maker blockchain networks are balanced, which keeps the price of the stablecoin Dai at $1 at all times. He said:
"In fact, there is a set of autonomous smart contracts responsible for coordinating and running the Maker system, which means that anyone with an Internet connection and collateral can create the stable currency Dai without the need for a trusted intermediary. Not only that, for Ensuring that the system remains solvent at all times, a network of market rule makers can earn network rewards from the liquidation of those potentially non-performing loans, thereby removing excess stablecoin Dai from circulation and ensuring that Dai balances always scale with collateral Comparable value."
However, the value of the stablecoin Dai could be wiped out in a flash crash in the overall price of the cryptocurrency market, which means that the price of the main cryptocurrency will drop sharply in a very short period of time (possibly within a few minutes), and this The situation is almost impossible.
