Crypto Funds Say 'Generalized Mining' Is the New Way to Invest

Crypto investors are pushing each other to actively participate in the networks they fund.

Extended to the investment community, that means directly engaging the networks you invest in.

The partnership comes in tandem with the launch of the Grassfed Network, an initiative meant to showcase CoinFund's commitment to helping its portfolio projects achieve network effects.

"CoinFund and Placeholder have both spoken previously on the use of generalized mining as a differentiated strategy for cryptofunds to directly engage networks and generate returns," CoinFund wrote in a Medium post announcing the initiative.

"Not only does #GeneralizedMining enable investors to add measurable concrete value to their portfolio networks through bootstrapping, liquidity provision, and operational loss-leading; cryptoinvestors are also the best-positioned profile for this type of early network engagement."

CoinFund is already providing support to live networks such as Livepeer, Steemit, Compound and others.

"We see any activity that is compensated with on-protocol rewards denominated in network assets as 'generalized mining,'" Devin Walsh, an analyst at CoinFund, told CoinDesk in an email.

Brukhman hasn't been the only one to articulate the advantages of deep-pocketed investors putting resources into network health.

"Just as a traditional VC firm would set aside capital for follow-on rounds, we believe that crypto investors who typically invest in protocols will find it's a best practice to also set aside capital for supporting the network."

"As investors, we are looking to attract great teams seeking our network participation in their early stage projects," CoinFund's Walsh said.