Delphi Digital launches Labs wing to bolster portfolio company development

Why wait for one of your investments to release a new feature when you can just build it yourself?

Delphi Digital’s newly announced expansion aims to do just that. The cryptocurrency investment, media and research company is now adding a Delphi Labs department that will be focused on contributing to Ventures portfolio company development.

0/ We’re happy to announce the next stage in @Delphi_Digital's evolution: Delphi LabsOur goal with Delphi Labs is simple: to become the leading contributor helping to build out the decentralized futurehttps://t.co/DEmgfPORmQ

— Delphi Digital (@Delphi_Digital) February 26, 2021

The move will help expand Delphi’s current developmental wing, which presently houses nine employees, according to Delphi Digital analyst José Macedo. Before it branched off from Research, the Labs team assisted with tokenomics design for multiple projects, and it is currently spearheading an overhaul of Aave’s $1.4 billion Safety Module.

According to Macedo, the impetus for the new company wing is the lack of developmental and smart contract engineering resources endemic to the space.

“I think what led to this model was working with top projects and witnessing first hand how much work needs to be done and how there just isn't the talent to do it. We realised the IP we've gained compounds and can be leveraged across the entire space.”

While Labs' current focus will continue to be on tokenomics and governance proposals, as it expands it will eventually help to incubate younger projects, and potentially launch entirely new protocols under the Delphi brand, per a two-year timeline in the announcement.

Big money governance

Delphi isn’t alone in taking a more active role in the protocols it invests in. How venture capital funds interact with decentralized autonomous organizations has been a hotly debated topic as of late, with some crypto community members arguing against preferential treatment (and/or governance token investment terms) for deep-pocketed investors, while others say that funds are welcome, like any other participant, to become a part of public good governance. 

So far, protocol founders remain resolutely in favor of venture capital involvement, particularly when the firms make material contributions. Uniswap founder Hayden Adams argued as much in a long Twitter thread two weeks ago:

1/ I think it's worth briefly explaining the positive and mutually beneficial experience I've had working with @paradigm @a16z @usv and other investors.I've seen a lot of negativity and propaganda so I think it's worth sharing my personal experience.Quick thread:

— Hayden Adams (@haydenzadams) February 12, 2021

Likewise, earlier in the month, Synthetix announced a $12 million raise from three venture capital funds, noting that the institutions would help with protocol development and participate in governance where able.

It’s a model Macedo said makes sense: Projects can leverage Delphi’s research and developmental heft, and Delphi will, in turn, see its investments flourish:

“We only want to work with projects whose tokens we intend to hold for several years and our goal is to be long-term participants with aligned incentives.”