VCs pull out of MakerDAO endgame, MKR price likely to face pressure
- Venture Capital firms a16z and Paradigm have pulled out of MakerDAO, shedding their MKR token holdings in response to the project’s endgame plan.
- Paradigm was the last of the three VCs selling 80% of its MKR holdings starting March 2023, ushering a decline in MKR price.
- VCs exit was influenced by founder Rune’s endgame plan to break up the project into smaller decentralized units called MetaDAO for real-world assets.
MKR emerged as one of the DeFi tokens that yielded massive gains for holders over the past two weeks. However, there is an interesting development behind the exit of Venture Capitalists (VC) and the project’s future roadmap.
Founder Rune shared his plans to break MakerDAO into small decentralized units, MetaDAOs for real-world assets, bonds and government treasuries. VCs did not agree with the roadmap for MakerDAO and decided to part ways, shedding their MKR holdings consistently.
Paradigm sold the last of its MKR holdings and the project is now ready for its endgame envisioned by founders and supporters within the community.
Also read: AAVE community to vote on proposal that could determine future of CRV and DeFi as we know it
MakerDAO loses its VCs as it heads towards endgame
The friction between Venture Capitalists invested in MakerDAO and its founder, Rune, was evident throughout 2022. Rune started selling LDO, ETH and DAI tokens to buy back MKR tokens in November 2022.
Attempting to win control over the project and steer it towards a break up into smaller decentralized units called MetaDAO, Rune and the community members supporting the founder continued their efforts. At the same time, VCs like a16z and Paradigm shed their MKR holdings in tranches, at 1.8 times or higher the price of the token’s acquisition for their firms.
Paradigm was the last of the VCs to sell MKR holdings and exit the project.
Paradigm actions
With VCs exit, the voting rights and control exercised by entities like a16z reduces, allowing MakerDAO and its community to naturally progress towards the next steps in the project’s roadmap. In this case it is breaking up the project into smaller units to power government treasuries or bonds.
MKR price likely to correct lower in response to the sale
The sale of MKR by these entities is likely to increase the selling pressure on MKR in the short term. Several factors play a role in this, the volume of MKR available across exchange platforms, demand for MKR among market participants and liquidity of the project. Depending on these factors, MKR price is expected to respond to the VC exit.
At the time of writing, MKR price declined 3.2% from Wednesday’s high of $1,370 to $1,325, at the time of writing. It remains to be seen whether MKR steadies after initial decline or suffers a correction this week.
The 50-day Exponential Moving Average (EMA) at $1,224 is key support for MKR, if price continues its downward trend.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
