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

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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, Pantera's investment directorCapital Joey Krug noted that the cryptocurrency industry is facing a lot of disruption in 2022. However, despite this, the year has been 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 implementation of aggressive risk controls. The irony is that centralized organizations call such measures “rigid and ineffective.” At the same time, centralized lenders themselves give users too favorable conditions, which results in the bankruptcy of such organizations,” emphasized the investment director of Pantera Capital.

Joey Krug said that algorithms based onthat DeFi protocols operate have proven to be safer and better than the “trust relationships” that centralized lenders use to convince users to take out a loan or invest.

“DeFi projects simply cannot claim that theyworth trusting, that’s why 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.

For the adoption of DeFi protocols to significantlyhas increased, 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 resolved, DeFi will become the basis for a new bull cycle. The circle expects these problems to be resolved within 2-3 years.

Earlier, Pantera Capital CEO Dan Morehead said that the collapse of the FTX exchange will not affect the prospects of the cryptocurrency industry and blockchain.