In brief
- Framework Ventures invested $750,000 in Kava network.
- Framework took no equity. Instead, it will exert its influence by staking tokens.
- That's because Kava is a decentralized finance protocol.
Money has changed hands in the world of DeFi, and venture capital firm Framework Ventures now owns $750,000 more of the Kava network, the equivalent to 3.89% of all tokens in circulating supply.
Kava, which launched in November 2019, is a decentralized finance platform, built on the Cosmos Network, on which users can leverage and hedge crypto. Consider it like MakrDAO—but instead of relying on ETH, it can use almost any asset it wants, thanks to Cosmos’s built-in interoperability protocol.
But this isn’t just another episode of crypto Shark Tank. Framework, the San Francisco venture capital firm founded and run by former Silicon Valley vets Michael Anderson and Vance Spencer, is playing things a little differently with its investments in DeFi. Instead of just buying equity in the Kava Labs—the regular exchange between a VC and a tech firm—Framework is investing in the network in the same way that anyone can: by staking tokens and running nodes.
“The investment vehicle is primarily tokens (instead of equity), active participation (through market making, liquidity providing or staking) earns more tokens, and the governance process is decentralized and community driven (vs. corporate governance),” Anderson told Decrypt.
And there’s no sitting around a board table demanding that Kava Labs run shop a certain way. “We don't automatically get rights or any form of control when we join a network, as would be the case with investors in corporations. We have to earn our right to govern from the communities and core teams of the networks we invest in,” he said.
Framework already made its mark last month when it proposed a system to change Kava’s monetary policy, which had to be approved by KAVA token holders. The VC firm also facilitated a partnership between Kava and another of its investments, decentralized price oracle Chainlink. "The work that Framework has done in community building for Link and incentives for Synthetix fit perfectly into Kava's roadmap," Scott Stuart, a product manager at Kava Labs, told Decrypt.
Of course, it was hardly like Stuart's company could turn down the money. Due to the decentralized nature of its smart contracts, anyone can buy KAVA tokens and influence the network. With enough money, anyone can be a venture capitalist in crypto.