Can DeFi Boost the Next Crypto Bull Run?

Pantera is currently considered the largest crypto hedge fund in the world. In the company’s latest newsletter, Joey Krug, the chief investment officer, made some statements about DeFi. He explained what role decentralized finance could play for a new uptrend in the crypto market.

DeFi: the big bear market winner of 2022?

In the recent newsletter, Krug pointed out that 2022 was the most upsetting year in crypto history. He indicated that the many breakouts and crashes of crypto markets have shaken up the sector, along with the bear market. He clarified that the DeFi field, however, remained completely intact during this period, despite some declines. In this context, Krug argued that decentralized finance could propel the crypto market into the next bull market.

What is interesting to note here, on the other hand, is that decentralized finance protocols, which lent to largely unknown counterparties, did not explode. The reason DeFi protocols have succeeded is on many levels. The surface level is that these protocols (e.g., Compound, Aave, and Maker) require people to provide collateral and apply aggressive risk controls», said Joey Krug in the Pantera newsletter.

DeFi, a catalyst for crypto prices?

The protocol code would be more reliable!

According to Pantera’s Chief Investment Officer, the code that governs DeFi protocols can be trusted more than humans. Indeed, Krug believes that this code is superior to the latter. He laments the fact that humans prefer to ensure user trust with arbitrary reasoning.

The senior executive explained:Decentralized protocols can’t just say “trust me, I went to MIT and I want to give it all to charity.” DeFi protocols are more of a “you don’t have to trust us” nature or, as Google so aptly put it before abandoning it: DeFi protocols “can’t be bad”“.

Krug asserted that DeFi has three major challenges to overcome. He presented these in three points, including the user experience on crypto wallets. DeFi will also have to tackle the payment of transaction fees in ether (ETH), to really get out of it. The last thing she needs to work on is the clumsy fiat ramps.

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