February 5, 2023

Pantera Capital: DeFi sphere will be the basis for the growth of bitcoin

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Pantera Capital: DeFi sphere will be the basis for the growth of bitcoin

According to the management of a large digital asset management company Pantera Capital, it is decentralized finance projects that will become the “fuel” for the next bull cycle.

In his letter, the investment director of PanteraCapital Joey Krug noted that in 2022, the cryptocurrency industry has faced many upheavals. However, despite this, the year was quite successful, and the DeFi sphere continues to develop rapidly.

“DeFi protocols that typically work withanonymous contractors continued to work. There are several reasons for this, including the use of aggressive risk control measures. The irony is that centralized organizations call such measures “harsh and inefficient.” At the same time, centralized creditors themselves give users too favorable conditions, which results in the bankruptcy of such organizations, ”said the investment director of Pantera Capital.

Joey Krug said that algorithms based onthat DeFi protocols operate have proved to be more reliable and better than “trust relationships,” through which centralized lenders convince users to take out a loan or invest funds.

“DeFi projects simply cannot claim that theytrustworthy, because they studied at MIT and generally stand for all that is good. On the contrary, their approach is that you should not trust anyone just like that. In addition, they usually work on an open source basis and anyone can check the algorithms,” Krug recalled.

To make the adoption of DeFi protocols significantlyincreased, three problems need to be solved, Krug believes. We are talking about not very convenient software for working with cryptocurrency wallets, significant transaction fees, especially on the Ethereum network, and the lack of a convenient way to transfer fiat funds into tokens. If these problems can be solved, then DeFi will become the basis for a new bullish cycle. Krug expects these issues to be resolved within 2-3 years.

Earlier, the CEO of Pantera Capital, Dan Morehead, said that the collapse of the FTX exchange would not affect the prospects for the cryptocurrency industry and blockchain in any way.