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August 18, 2018
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Kenrick Drijkoningen

Ethereum’s falling price splits the crypto community

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Hello And Welcome Back To The Latest Edition Of All The Cryptos Are Getting Rekt Right Now.

Crypto bloodbaths have become fairly common in 2018 — mainly because of the insane growth in 2017 — but we’ve not covered them all because they are so numerous and often include so-called ‘flash crashes’ or small drops, but the fall happening today is worth noting for several wider reasons.

Primarily that’s because this is a major test for Ether — the token associated with the Ethereum Foundation that is the second largest cryptocurrency by volume — has been on a downward spiral with little sign of change.

Ether, which is the preferred platform of choice for most developers building on the blockchain, is down nearly 17 percent over the past day. That’s erased billions of dollars in paper (crypto) value as the bear market for cryptocurrencies continues to pull markets south.

The drop also marks the first time ever that the price of an Ether has fallen below its valuation over one year: one Ether is worth $266 right now at the time of writing, versus $304 on August 14 2017. The token has been steadily falling since early May, when its peak value was $808, and as the lynchpin for many ICO project tokens, its demise has sent the value of most other tokens down, too.

Just looking at Coinmarketcap.com this morning, all but two of the top 100 tokens are down over the last 24 hours with many losing 10-25 percent of their value over the past day. Bitcoin, too, has dropped below $6,000, having topped $8,000 for a time last month.

Ether’s plummet below $300 has sparked a mixed debate among those in the crypto community. The token had been held as visionary, an improvement on Bitcoin that gives developers a platform to build on — whether it be decentralized apps, decentralized systems or more — but that hasn’t been reflected in in this months-long price retreat.

Certainly, two founders who spoke TechCrunch and have held ICOs expressed a belief that Ether “needs to find some price stability” to allow the focus to become about product and not just ‘get rich’ speculation. Of course, it helps that the two founders and many of those who held token sales have long since sold the Ether or Bitcoin they raised in exchange for fiat currency. Indeed, if their token sale was last year, the chances are they got a lot more real-world cash than they initially bargained for or would get now.

But still, the idea of consistency is shared by others who are in crypto professionally. That includes investors like Kenrick Drijkoningen, who is in the midst of raising a $10 million fund for LuneX, a spinout of Singapore-based VC firm Golden Gate Ventures.

In an interview last week, Drijkoningen told TechCrunch that raising a fund and doing deals in a ‘low tide’ market like now beats attempting to do the same amid a frothy period with hype and peak valuations — one Ether was worth nearly $1,400 in January, for example. A number of others VCs have long said that, ultimately, stability is good for the ecosystem.

Vitalik Buterin is the creator of Ethereum

But, on the other side, there are more pessimistic voices.

Among some investors canvassed by TechCrunch, the sense is that with the downturn of the ICO funding boom that fueled much of Ethereum’s rise, there may be less incentive to hold as the broader market’s interest in the cryptocurrency wanes.

For one Bitcoin bull, the intrinsic value of Bitcoin as an immutable, decentralized ledger acts as a more powerful draw than the perceived mutability and centralization that the Ethereum platform offers.

“People are also beginning to understand the unique value of an immutable, decentralized ledger, and recognize that Ethereum is not that,” the investor wrote in an email.

Another long-term problem that Ethereum faces, according to this investor, is that the promise of decentralized apps backed by the token is yet to be released. Crypto Kitties, a smash hit earlier this year, has faded and now there’s competition as Bitcoin’s Lightning Network is adding nodes and apps — referred to as LApps — which can operate in a similar but leverage the Bitcoin ledger.

It’s still early days, of course, and markets will always rise and fall, but this is the first big test for Ether and Ethereum. Beyond the sport of price speculation, it’ll be worth watching to see where this heads next.

Note: One of the authors of this post — Jon Russell — owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

News Source = techcrunch.com

Singapore’s Golden Gate Ventures announces a $10M fund for crypto deals

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VCs around the world are trying to wrap their head around crypto, and the new investment paradigm it brings. Some have made one-off deals but a few have jumped in off the deep end with dedicated crypto funds, with A16z in the U.S. the most prominent example. Now Singapore has its first from the traditional world after prominent firm Golden Gate Ventures announced a spinoff fund called LuneX Ventures.

The fund is focused on crypto and it is targeting a $10 million raise. Its announcement comes weeks after we reported the first close for Golden Gate’s new $100 million fund, its third to date, which is backed by Naver, Mistletoe and others.

Golden Gate already has some exposure to ICOs, having backed the company behind OMG, and plenty of rumors have done the rounds about its plans for a standalone fund considering the surge in ICOs, which have scooped up over $10 billion in investment this year so far.

Notably, LuneX will be the first crypto fund from a traditional investor in Southeast Asia, although Wavemaker Partners — which is backed by early Bitcoin proponent Tim Draper — does have a U.S.-based fund.

LuneX will be run by founding partner Kenrick Drijkoningen, who was previously head of growth for Golden Gate, with associate Tushar Aggarwal, who hosts the Decrypt Asia podcast. The two are assembling a small support team which will also be assisted by Golden Gate’s back office team.

Drijkoningen told TechCrunch in an interview that he believes the time is right for the fund, even though the price of Bitcoin, Ether and other major tokens is way below the peaks seen in January.

“Despite the fact that public markets are down, the amount of talent that’s moving into this space is exciting. There are young entrepreneurs who are passionate about this space and want to build an ecosystem,” he said, adding that stability on price is a good thing.

“There’s a lot of crypto funds but most of them are hedge funds,” Drijkoningen added. He explained that LuneX intends to take a longer-term approach to investments by helping its portfolio and generally doing more than shorting and quick trades.

Kenrick Drijkoningen, Founding Partner, LuneX Ventures

Drijkoningen explained the capital will be divided equally for token sales, purchasing existing tokens and equity-based investments in crypto projects. That means getting into private sales and pre-sales for ICOs, and seeing what tokens already on the market have long-term return potential. On the equity investment side, Drijkoningen is looking for what he calls “infrastructure” businesses, such as solutions for token custody, banking and more. The fund’s capital is being raised in fiat, but it is considering allowing Bitcoin, Ether and other tokens.

Although Singapore is seen by many as a ‘crypto haven’ the legal status of crypto and tokens is unclear since the Monetary Authority of Singapore (MAS) has deferred on making these decisions. That’s in contrast to places like Malta, Gibraltar and Bermuda, which are actively wooing crypto companies with incentives and legalization frameworks, but Singapore’s status as a global financial hub and a destination for Southeast Asia’s investor capital has helped make it a destination for crypto companies all the same.

MAS is known for engaging with crypto stakeholders, and Drijkoningen said there had been discussions although he did not elaborate further other than to say that the regulator is “quite well informed.” He clarified that the new fund is structured so that it is legally compliant while it is banking with a “crypto-friendly” bank in the U.S. since Singaporean banks to do provide services to crypto companies.

Drijkoningen said the fund’s LP base is comprised of high net worth individuals who understand crypto or are crypto-curious, as well as hedge fund managers and family offices. He said there’s been interest from projects that raised significant capital from ICOs and want to invest in the ecosystem and grow networks, as well as some long-time Golden Gate LPs.

There’s no doubt LuneX is an early mover in Southeast Asia — well, the world — but Drijkoningen believes it won’t be long before others in the traditional VC space follow suit. He revealed that already a number of other funds are “looking into” the opportunities, and expects that some will make a move “this year or next.”

As for LuneX, the plan is very much to scale this initial fund in the same way that Golden Gate has gone from a small seed fund to a $100 million vehicle in less than eight years.

“We want to get up and running, get a good return and raise a larger fund,” Drijkoningen said. He added that the fund is currently looking over half a dozen or so deals that it hopes to wrap up soon as its first investments.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

News Source = techcrunch.com

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