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Joey Krug: DeFi is the basis for Bitcoin growth

Wednesday, 25 January 2023

According to the management of Pantera Capital, projects of decentralized finance will become the "fuel" for the next bull cycle.

The investment director of Pantera Capital, Joey Krug, noted that in 2022 the cryptocurrency industry faced many shocks, however, the year has become quite successful, and the DeFi sphere continues to develop rapidly.

In order for the adoption of DeFi protocols to increase significantly, 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 we manage to solve these problems, then DeFi will become the basis for a new BULL cycle. Krug expects that these problems will be solved within 2-3 years.

DeFi protocols, which usually work with anonymous counterparties, 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 ineffective." 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 the algorithms on the basis of which DeFi protocols work turned out to be more reliable and better than "trust relationships".

DeFi projects simply cannot say that they should be trusted, that's why they studied at MIT and generally stand for everything good. On the contrary, their approach is that you should not trust anyone just like that. In addition, they usually work on the basis of open source and anyone can check the algorithms..
Krug recalled

However, Krug acknowledged that there are still challenges that need to be addressed. One of the major challenges is the scalability of DeFi protocols, especially in the face of increasing demand. The current infrastructure may not be able to handle the increasing number of users and transactions, which could result in slower transaction times and higher fees.

Another challenge is the issue of security. While the decentralized nature of DeFi makes it less vulnerable to hacks and attacks, there are still risks associated with smart contract vulnerabilities, which could result in the loss of funds. Therefore, it is important to implement robust security measures and conduct thorough audits of smart contracts.

Despite these challenges, Krug remains optimistic about the future of DeFi. He believes that as more people become familiar with DeFi and its potential benefits, adoption will continue to grow. Moreover, with the ongoing development of new solutions and technologies, such as layer 2 solutions and cross-chain interoperability, many of the current challenges can be addressed.

In conclusion, DeFi has the potential to revolutionize the financial industry by providing a more efficient, accessible, and secure alternative to traditional financial services. While there are still challenges that need to be addressed, the continued development of the DeFi ecosystem and the increasing adoption of decentralized finance protocols suggest a bright future ahead for this emerging industry.