News
Venture Capital Crypto Firms Invest Millions in “Teacher Coins” Despite Centralization Concerns
Crypto VC firms have increased investment in the market this year despite fundamental concerns about blockchain. A new Bloomberg report shows an inflow of funds “Professor Coins”, virtual asset projects initiated by university professors.
According to the report, companies launched by academics received millions from venture capital firms as the market recovered. The inflows come on the heels of renewed investment in the first quarter of 2024 after Bitcoin (BTC) reached an all-time high above $72,000.
Companies like CheckSig, Sahara, etc. were founded by university academics and have seen inflows over the past two months.
Crypto VC Firms Reestablish
The turn to teacher coins has generated significant flows for companies offering reestablishment services. Re-establishment allows validators to trust already staked assets. This opens up space for new projects and why start with fundraising.
Crypto VC firms have gained interest in EigenLayer and Babilónia records recent flows of 118 million dollars for both projects. Founded by University of Washington professor Sreeram Kannan, the company secured $100 million in funding from Andreessen Horowitz while Babylon founded by Stanford University professor David Tse, raised $18 million.
Riad Wahby, engineering professor at Carnegie Mellon University, highlighted the research and usefulness of both projects in industry. “They thought of many of these types of reset technologies. I mean, this is kind of their baby, so it makes sense. And I think that this technology will increasingly come from research.”
Kate Lawrence, chief executive of venture capital firm Bloccelerate, said academic background can be a detractor because professors tend to focus on theory rather than practice. However, the company invested in both projects based on the reestablishment model.
Concerns about centralization
The move to professor coins by crypto VC firms does not come without criticism from the industry, as many cite reduced decentralization. This comes after EigenLayer’s token launch plan, which will distribute 1.67 billion tokens, with over 50% going to early participants and investors.
Coins will also be non-transferable, causing minor concerns. The team explained that making it non-transferable provides time to improve decentralization.
Read too: FED Quietly Begins Money Printing, Spot Bitcoin Price Rises