VC firm Pantera sums up 2023 forecast; says DeFi is poised to take over the crypto market – Cryptopolitan

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Pan­tera Cap­i­tal, a cryp­to-focused ven­ture with about $3.8 bil­lion in assets under its man­age­ment, summed up its 2023 fore­cast declar­ing Decen­tral­ized Finance (DeFi) is the future and will take over the cryp­to market.

Last year saw the begin­ning of the bear mar­ket, with its pro­gres­sion exac­er­bat­ed by mul­ti­ple finan­cial dis­as­ters and failings—such as FTX’s multi­bil­lion-dol­lar implo­sion in cen­tral­iza­tion and Gen­e­sis’ bank­rupt­cy fil­ing that occurred only last week.

In his fore­cast­ed “Year Ahead” investor let­ter, Dan More­head — CEO and Co-Chief Invest­ment Offi­cer of Pantera—proudly declared that the com­pa­ny had weath­ered the past three ‘cryp­to win­ters’ in pro­fi­cient blockchain fund management.

Although each event may have been con­sid­ered cat­a­stroph­ic, take Mt. Gox for exam­ple; this crash was far big­ger than FTX today as it stood at 85% mar­ket share when the fall hap­pened, and yet still blockchain man­aged to recov­er. It’s a rev­o­lu­tion­ary tech­nol­o­gy that is only start­ing its jour­ney – there’s no doubt it will sur­vive these issues.

Dan More­head

DeFi in 2023

Joey Krug, co-Chief Invest­ment Offi­cer of Pan­tera, also pre­dicts that the world’s finan­cial rails will even­tu­al­ly become blockchain net­works using smart con­tracts. How­ev­er, he not­ed that the crit­i­cal ques­tions are how the blockchain space can make this tran­si­tion and what needs to be done to reach the goal.

He rec­og­nized that scal­a­bil­i­ty sys­tems have decreased trans­ac­tion fees on the Ethereum blockchain to less than 10 cents. Also, Krug fore­casts that through future upgrades to Ethereum and pro­to­col exten­sions for sec­ond-lay­er scal­a­bil­i­ty tools, such costs will be fur­ther low­ered to around 1 cent – enabling decen­tral­ized exchanges to rival those larg­er cen­tral­ized exchanges.

Accord­ing to Krug, the ulti­mate goal of cryp­to is a world where users can access decen­tral­ized finance (DeFi) with ease through apps on their phones. This would pro­vide them low­er fees, glob­al liq­uid­i­ty, and 24/7 mar­kets – with­out banks or bro­kers. Yet achiev­ing this requires solu­tions to var­i­ous issues that fit into two dis­tinct areas: improv­ing DeFi’s liq­uid­i­ty and sim­pli­fy­ing its use for new play­ers in the cryp­to space.

Also, the co-Chief Invest­ment Offi­cer high­light­ed the impor­tance of entic­ing more insti­tu­tion­al cap­i­tal into DeFi by intro­duc­ing fed­er­al­ly or state-reg­u­lat­ed cus­to­di­ans that sup­port Ethereum. Fur­ther­more, com­bin­ing liq­uid­i­ty across mul­ti­ple chains and lay­er 2s and liq­uid­i­ty pools would cre­ate a sys­tem where apps could scan for com­pet­i­tive pric­ing and exe­cu­tion after users sub­mit their trades. While this kind of aggre­ga­tion neces­si­tates con­struct­ing secure cross-chain bridges, it is still achiev­able despite the wave of exploits to these same bridges.

Krug fur­ther stat­ed that UX design and user expe­ri­ence have improved in the DeFi space, yet cryp­to wal­lets still require opti­miza­tion. In addi­tion to sim­pli­fied UX design, reduc­ing trad­ing fees that are always paid with ether (ETH), regard­less of the asset being trad­ed, and expand­ing fiat on-ramps could prove invalu­able for mak­ing the DeFi space more accessible.

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