Framework Ventures, a fund primarily investing in decentralized finance that was co-founded by Michael Anderson and Vance Spencer, has risen to prominence in the cryptocurrency space following the fall of ICOs.
Framework Ventures has made several investments, notably into Chainlink’s LINK token and Synthetix’s SNX token. But the fund is not all about passive investments, and it recently announced a formal spin-off focused on incubating and creating new DeFi projects in-house.
Anderson spoke with Cointelegraph to outline what is happening with DeFi and yield farming, a phenomenon which has swept the space and grabbed the attention of many money-hungrey investors, and also made concerning noises towards regulators.
Power and potential of yield farming
Anderson described what is happening right now a lot like what happened in 2017 with the ICO craze which had a lot of promise, but also many poor projects.
“I think it’s just like what we saw in 2017 with the ICO craze. There was a lot of garbage, but there was true value in it. Namely, Maker was launching, Chainlink launched then, and there were some projects that are pretty fundamental now that were launching in 2017,” he explained.
“And so, I think with yield farming, it’s a lot of the same stuff where there’s going to be a lot of garbage, there’s going to be a lot of pump and dump — literal price charts that go like [pump and dump schemes]. But I do think that there’s going to be some value. And as someone who’s using and investing in these protocols, it’s our job to make sure that we find that value.”
Sushi taking business
With the hype around DeFi and yield farming there has of course been a boom in business, and this has led to some competition. Notably, Uniswap, and now SushiSwap
“I think what SushiSwap is telling the market is that Uniswap needs to implement incentives or some method of value capture other than just the fees that are being generated in the liquidity pools. Whether or not SushiSwap’s going to work, we’ll see. I am making popcorn, taking back my chair and waiting and watching,” Anderson added.
“But I do think this should be a signal to Uniswap that if there are plans for a token with some value capture or incentive model for users or liquidity providers of Uniswap, it’s time to bring them out. Because if they don’t, other people will try to steal it.”