Image source: Twitter
The recent announcement of a $100m war chest for EOS projects caught the crypto community by surprise, not least due to an otherwise gloomy picture in the markets following the collapse of FTX.
Just two days after FTX and Alameda Research filed for Chapter 11 bankruptcy, EOS Network Foundation (ENF) CEO Yves La Rose took to Twitter to let the cat out of the bag, promising that the $100m ecosystem fund would be ring-fenced for investment in purely EOS projects.
With the dust having settled on that announcement, how will this significant capital investment position EOS in 2023? Particularly given the increasing competitiveness of the space, as new blockchains like Sui, Aptos and Midnight vow to take the fight to OG networks like Ethereum, Cardano and EOS itself.
Funding From Within
According to La Rose, the goal of launching the ecosystem fund is to make EOS the number one choice for web2 businesses transitioning into web3, and for developers keen to launch new projects.
Interestingly, the ENF founder also suggested that the $100m was merely starter capital, noting that the Foundation expects “to grow the size of the fund significantly as we continue to foster positive relationships with crypto VCs.”
The fund will be exclusively managed by a newly-created VC, EOS Network Ventures (ENV), a long-mooted pillar of the ecosystem first cited in an ENF report at the turn of the year. In accordance with this community-centric approach, the capital was tabled as a multi-signature proposal on-chain, with a majority of EOS Block Producers green lighting the move.
So, what can we expect from the fund? Since the announcement was made, we have gained a better understanding about how the capital will be deployed. In a detailed FAQ, ENV explained that it aims to attract capital investment and deploy that capital for the benefit of EOS as a whole; projects it is specifically seeking to target include those related to blockchain gaming (GameFi), the metaverse, eSports, NFTs, and fintech/DeFi.
The FAQ also clarified that both the EOS Network Foundation and EOS Network Ventures will operate as independent entities, following distinct but complementary mandates to serve the EOS blockchain. An essential component of the fund will be a buyback-and-burn program, intended to drive value back to holders of EOS’ eponymous digital asset.
“One problem we’ve seen all too often in the crypto community is a misalignment of incentives between VCs and the community,” says La Rose. “What makes EOS Network Ventures unique is that their incentives are aligned with the EOS community. As a result, ENV has a vested interest in helping the EOS ecosystem.”
As to the personnel tasked with vetting and backing web3 projects, that is yet to be decided. In the aforementioned FAQ, it is stated that the EOS-focused VC has not yet been formalized, with the early priority being approval of the fund itself. In the coming months, the EOS Network Foundation will recruit experienced financiers to manage the fund, with existing EOS Fund Management (EFM) multisig members acting as both custodians of the treasury and limited partners in the VC.
A Watershed Moment
However you slice it, this fund is a major statement of intent from EOS and a necessary step if the network hopes to grow and succeed. As La Rose says, making $100m available for projects in light of current market conditions is great news for the smart contract platform first launched in 2017.
2022 has been a banner year for VC investment in blockchain, and other networks have unveiled similar war chests over the past 12 months; most notably the NEAR Foundation’s $100m fund announced in September. The key, of course, will be for EOS Network Ventures to back the right horses, winning web3 protocols that drive people to EOS instead of its countless competitors.