Comments On Pantera Capital’s Predictions For The Crypto Market In 2022
January 28 2022 - 3:15AM
NEWSBTC
One of Pantera Capital’s investors, Paul Veradittakit, was brave
enough to make predictions for this year in the tumultuous world of
crypto. Even though we applaud the courage, we’re going to poke
holes in them. Because this is the Internet and that’s what we do
here. To be clear, the author went through 2021 biggest trends and
extrapolated them into the future. Which is a safe enough
technique. Related Reading | Sports NFT Marketplace
Lympo Suffers An $18.7 Million Hack Considering Pantera defines
itself as the “first U.S. institutional asset manager focused
exclusively on blockchain,” you know Veradittakit didn’t even
mention Bitcoin. The following is a purely crypto affair. It’s also
worth noticing that the biggest criticism that Web3 gets is that
it’s funded by venture capital and they’re the ones who will
ultimately benefit from it. And, well, that’s just what Pantera is
and does. In any case, let’s explore Veradittakit’s ideas and
predictions. Pantera On L2s and Rollups Surprisingly, the article
starts by throwing Ethereum under the bus. According to
Veradittakit, all the action will be on L2s. Those grew
tremendously in 2021, and the Pantera investor considers them
essential to Ethereum’s scalability. “As mainstream adoption
of crypto continues to grow, Ethereum’s network congestion will
only become worse, exacerbating its problems with latency and fees.
Rollups are critical to sustaining the growth of Ethereum by
ensuring that compute infrastructure is highly scalable, allowing
users to interact with dApps with similar or even better
expectations around usability as with traditional web apps.”
Reading between the lines, this prediction also says that Ethereum
is not going to release any of its network upgrades this year.
Which sounds about right. Pantera On Non-Ethereum/Bitcoin Chains
This prediction refers to the battle of the L1s, or the supposed
Ethereum killers. The Pantera investor is obviously partial to one
in particular: “Recent activity in the Solana community, including
the launches of massive funds for decentralized social media and
gaming, suggests that the ecosystem will continue to grow immensely
in the coming year.” First of all, you can’t have “decentralized
social media and gaming” in a centralized platform like Solana.
Second, Veradittakit forgets to mention Solana’s constant technical
problems and outages. Make of that what you will. Another
tendency the author mentions are bridges, “which enable
interoperability between vastly different networks,” which he
considers will “accelerate the growth of non-Ethereum ecosystems.”
Or, to put it more bluntly: “Overall, these advancements in
cross-chain infrastructure will accelerate the speed at which
alternative layer one chains gain traction, fostering the
development of a truly robust, diverse multi-chain crypto
ecosystem.” What the Pantera investor really means is that all
other L1s will keep leaching on Ethereum. Which sounds about right.
SOL price chart on FTX | Source: SOL/USD on TradingView.com
Veradittakit On Composability and Web3 This theme ties with the
previous one. But the Pantera investor gets into a very interesting
topic: “Decentralized identity projects, which allow
users to maintain full, more precise control over personal data and
reputation, enabling use cases around un-collateralized loans, know
your customer (KYC) rules, and more. In 2022, we’ll see more
projects expand the scope of on-chain ownership, allowing users to
have full, functional control over their identity and holdings in
the digital world.” One thing’s for sure, the world needs “a single
login across all services”. No one can handle the number of
passwords we’re supposed to remember. This is a real problem. In
the article, however, the author focuses on Ethereum-based
solutions. We would like to mention that there’s an alternative
that uses the Lightning Network. And, you know, that runs over a
network that’s actually decentralized. Pantera On Expansion of
NFTs This is his least controversial take. Veradittakit
thinks “NFTs will continue to grow immensely in popularity through
the coming year”. He elaborates: “NFT projects in 2022 will show
substantially more diversity in use cases and will reconfigure how
we interact with and think about ownership of digital media more
broadly.” However, paraphrasing Vitalik, NFTs have to live through
a bear market before they can be considered a success. Is there
going to be a bear market in 2022? Probably not. So, Pantera’s
prediction stands. Veradittakit On Decentralized Autonomous
Organizations This prediction is also fairly
uncontroversial: “Given their heightened prominence, I expect
to see DAOs become a mainstream vehicle for online organizing and
collective action, helping individuals across the globe get
actionably involved with causes they care about.” And the Pantera
investor follows it up with this one: “As DAO operations grow in
complexity, I expect to see even more projects building out DAO
tooling and infrastructure in 2022.” More DAOs and tools to manage
them? That sounds about right. Related Reading | Solana: A Quick
Review And Look Ahead Pantera On DeFi Security This prediction
starts with chilling stats: “More than $610 million were stolen
through DeFi exploits in 2021 (a staggering eightfold increase from
$77 million in 2020), and an additional $704 million in funds were
stolen and then later returned by white hat hackers, like those
behind the $600 million PolyNetwork exploit.” Considering 2021 was
the year of DeFi, this should come as no surprise. Criminals follow
success and attention. In any case, look at those numbers and
extrapolate them to what they would be if DeFi achieves mainstream
status. “In 2022, I expect to see security become a tremendous
focus for DeFi projects, and anticipate several more projects
launch around better smart contract auditing, precise runtime
monitoring, and consumer protections.” The question here is, is
that enough? Or are smart contracts a security risk by definition?
Will anyone be able to build an unhackable DeFi protocol? Who will
win this race? Featured Image by JohannaIris in Pixabay | Charts by
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