Andreessen Horowitz invests in a stablecoin crypto project

Stablecoins are created by governments to decrease the volatility of regular cryptocurrencies by pegging the value of digital coins to either fiat currencies, some commodity such as gold or other cryptocurrencies. There are several kinds of stablecoins, including those directed towards the private sector, called retail ones and those for the state, called wholesale.

One of the biggest venture capital companies in the US, Andreessen Horowitz, has made a major investment of $15 million in the stablecoin Maker. What the stablecoin project does is adjust the supply of the coins in an algorithmic way to keep the value of the coin as steady as possible.

Just recently, the VC firm opened a $300 million cryptocurrency fund, called a16z. The aim of the fund is to invest in promising cryptocurrency/blockchain-related projects. The company has already invested in CryptoKitties.

As for the stablecoin project, CCN reported:

“Holding MKR tokens will offer a16z the rights to govern MakerDAO and the Dai Credit System as it becomes the first decentralized autonomous stablecoin organization.”

The stablecoin, called Dai, is a decentralized system that uses smart contracts on the Ethereum blockchain. Once users collaterize their assets to obtain a loan, the Dai Credit System will automatically create the stablecoin.

The Dai coin is backed up by ETH, which is losing its value to the US dollar constantly. However, one strategy that Dai uses is not to be pegged to only one currency, but possibly to several ones, hence minimizing the risk of losing its value and stability.

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