Reported on Thursday, Badger DAO, a Bitcoin on Ethereum DeFi solution, announced the sale of $21 million worth of its Treasury assets to four top crypto VC firms, including Polychain Capital, Parafi Capital, Blockchain Capital, and an unnamed whale wallet, 0xB1.

The idea first popped up in the Badger Improvement Proposal, BIP-37, under the “Treasury Diversification through Strategic Partnerships” plan, which aims to diversify a portion of the BADGER tokens stored in the Treasury to stablecoins managing the risk.

While it’s uncommon in the DeFi space, as most projects select to raise funds through the market on their AMMs, BIP 37 suggests funding from VCs offers better benefits for Badger DAO. Raising VCs funds will help Badger DAO reduce the market risks of selling through AMMs while gaining strategic value from the investors.

Chris Spadafora, the founder of Badger DAO, supported the current change in the system that is seeing more VCs invest in decentralized finance platforms.

“DAOs should embrace large investment players based on their willingness to participate in governance and open their network to push the protocol forward,” Spadafora said. “Doing it right for VCs is about becoming a community member vs. an investor.”

Badger DAO Treasury currently holds nearly $700 million worth of its native assets – $BADGER and $DIGG. According to Chris Spadafora, the sale involved an exchange of staked BADGER tokens (bBADGER) for USDC tokens which will be used to create a “backstop” insurance pool for users’ funds.

The proposal suggests the community take a “barbell strategy,” but a clear path on how the stablecoins will be used is yet to be determined. One idea is to hold the tokens as part of the Treasury while the USDC tokens can also be staked to earn yields to help the DAO during bear market conditions.

The VCs will also be “getting involved in governance to help the protocol grow, providing long-term liquidity and building more bridges with institutional ecosystem partners,” Spadafora added.

Badger currently sits on $1.40 billion in total locked value (TVL), according to DeFi Pulse, placing it as the tenth-largest DeFi protocol.

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