According to the Cardano inventor, VCs are currently looking elsewhere, as Cardano is not ‘Ponzinomics’. With that said, Cardano’s dApp ecosystem is booming. Charles Hokinson predicts that VCs’ money will eventually come to the altcoin project.
VCs are not interested in this altcoin!
cryptocoin.comAs you follow in , Charles Hokinson spoke at Mainnet 2022 in New York. Hoskinson talked about people’s mistakes with Cardano. Topics of discussion included the benefits of starting with a Bitcoin base (UTXO), the slow, methodical principles that consider upgradability paths before they are needed, and the nuances of smart contract design. Hoskinson made the following statement:
Can we do the heavy lifting now? So I can link it to a simple solution. Meanwhile, all these other people are trying to take old systems and strengthen them into abilities they never intended.
Why do VCs overlook Cardano?
Of particular interest, however, was Hoskinson’s handling of venture capitalist money. Hoskinson spoke with Ryan Selkis, co-founder of the Messari research platform. He explained why some VCs overlooked the Cardano ecosystem. The CEO of The Input Output (IO) argued that VCs are chasing short-term profits through unfair early distributions to rob individual purse holders. However, before detailing it, he said, “The problem was we didn’t have any ponzinomics for them.”
Supporting this view, Hokinson cites an anonymous example that was released at a high valuation. This was soon followed by rich insiders who abandoned their tokens, triggering a drop in price, and the first investors. What happened to EOS echoes what Hoskinson said. The initial cryptocurrency offering of $4.4 billion throughout 2018 remains the largest increase to date. Given Cardano’s ‘egalitarian token distribution’, such an opportunity does not exist. This leads to the project being overlooked by the VCs. Hokinson says:
It was a fair distribution of Cardano. It has a great Gini coefficient. One of the most widely distributed currencies. So there was no internal distribution to go and sell.
The Gini coefficient expresses a measure of wealth distribution. In cryptocurrency, the data 1, which represents absolute inequality, is used to measure the degree of centralization of a blockchain. Conversely, at the other end of the spectrum, data 0 represents perfect dispersion.
“Things will change in the next two years”
However, things are ready to change. “Because greed is their business and making money is a fiduciary obligation for their LPs,” Hoskinson says. The spark for this move is when the Cardano dApp ecosystem kicks in and projects are worth billions of dollars. Hoskinson predicts that this will happen within the next two years. In this context, he makes the following assessment:
Where they get involved will be when you see multiple Cardano dApps start valuing multiple billion dollars. Because there is something to invest in. There is something to connect. So probably 2023, 2024.
In any case, the IO CEO points out that the ecosystem already has its own VC in the community-run Catalyst fund, which has $500 million in ADA to support startup projects aiming to build on Cardano.
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