Pantera Capital, a prominent hedge fund in the crypto space, states that a significant role will be played by decentralized finance (DeFi) in the upcoming bull run. Joey Krug, the chief investment officer of Pantera commented on this in the exclusive newsletter of Pantera. The CIO noted that DeFi will provide the basis for the impending bull market.
Next Bull-Run in Crypto Will Be Ignited by DeFi, Says Pantera Capital’s CIO
Krug mentions that the previous year, with several crypto crashes and implosions, turned out to be perhaps the largest year for crypto’s upheaval throughout this sector’s history. He assists in the management of a fund having a $6.9 billion valuation. Krug is of the view that the decentralized finance remained effective in staying fully intact during the last year though the prominent protocols witnessed decreased prices.
It is noteworthy here that the entities in the decentralized finance sector did not witness any implosions. As per Krug, these entities lent to majorly anonymous counterparties. In his words, there are a couple of reasons why the respective protocol remains effective during the previous year. The apparent level says that the protocols such as MakerDAO, Aave, and Compound require posting collateral as well as implementing strict risk controls.
The CIO revealed that the centralized bodies frequently refer to the respective risk controls to be too strict. In his words, centralized institutions cannot administer risks like them. A few months back, he added, one of his closest friends informed him regarding the borrowing terms implemented by one of such firms. The respective terms included a ridiculous amount of risks related to blow-ups.
On noticing that, Krug predicted that the next downturn in the crypto world will potentially be caused by the respective centralized lending organizations. As mentioned by Krug, the code responsible for governing the protocols in the DeFi world has turned out to be greater than humans who assure their consumers to trust in line with arbitrary reasoning. He asserted that decentralized protocols not only assure but also fulfill their assurances.
Krug disclosed that the DeFi protocols cannot do something evil. The only thing permitted at the protocol layers is to develop something that operates. On the other hand, he added, the centralized world is open where the code is accessible to everyone. As a result, any can read and scrutinize it. The executive of the hedge fund points out that decentralized finance chiefly requires addressing 3 chief problems to become more efficient.
As he puts it, the respective things take into account the consumer experience on the wallets specified for crypto assets. Another thing to be considered in this respect is to decrease transfer charges in the case of ETH tokens. The 3rd-aspect to likely be improved is the hefty fiat onramps within the DeFi world. Krug claimed that the aforementioned advancements will take the DeFi sector to further heights.
Krug Says DeFi Sector’s Present Issues Will Take Next Few Years to Settle down
The respective developments will eventually enable decentralized finance to bring about the impending bull run in the world of crypto assets. Krug thinks that the issues present in the present time will require up to 2 to 3 years to settle down. He is confident that many unique innovations will be introduced in this field to offer remarkable opportunities. With DeFi, an exclusive, worldwide, and proficient financial system will be given, Krug claimed.