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Why a New Jersey-Based Cryptocurrency Startup is Getting a Lot of Love From Investors
Venture Capital, Capital Markets, FinTech
Call it the anti-Bitcoin: Whereas the world’s most popular cryptocurrency has fluctuated wildly between euphoric highs and dreaded lows, a crypto startup based in Hoboken, New Jersey aims for something a lot more predictable, as TechCrunch reports.
Called Basis, the startup is working on developing a “stable coin,” according to TechCrunch, “whose elastic supply will ostensibly expand and contract to keep its value at about a dollar instead of all over the map.” The core of this strategy aims for a stability that will give it a “token that people will actually use, instead of use to speculate.”
Basis’ strategy has attracted some friends in high places, as TechCrunch reports.
Investors apparently love what Basis is cooking up. The upstart is announcing today that it has raised a somewhat stunning $133 million in funding from Bain Capital Ventures, GV, longtime hedge fund manager Stan Druckenmiller, one-time Federal Reserve governor Kevin Warsh, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz, WingVC, NFX Ventures, Valor Capital, Zhenfund, Ceyuan, Sky9 Capital, Digital Currency Group and others.
Chief executive Nader Al-Naji co-founded Basis with Lawrence Diao and Josh Chen, his classmates from Princeton. The three are looking to gain widespread adoption through three markets, according to TechCrunch: Developing markets, the crowdfunding space and the cryptocurrency exchanges that are dealing with the volatility of other virtual coins.
Salil Deshpande, a managing director at Bain Capital, described Basis in a Medium post as “a price-stable cryptocurrency that is robustly pegged to the US dollar.”
Basis mantains the peg by algorithmically adjusting its “money supply” (i.e., the supply of tokens) in response to the exchange rates between the token and the US dollar, using methods similar to what central banks do manually. In doing so, the Basis team has developed the first software protocol that can automate the core function of a central bank in a decentralized and algorithmic way.
Al-Naji declined to discuss with TechCrunch when the Basis coin would be in circulation.
Photo: Getty iStock