Joey Krug, co-CIO at Pantera Capital, is an Augur alum who got into the Ethereum space in 2014. He discussed the DeFi landscape and whether there are too many solutions looking for a problem or if they actually have all intrinsic value.
(32:01) “If you look at transaction costs to do something on Ethereum, as of this morning it’s around 200 gwei, which means to send money from one person to another it’s like USD 10. An Augur trade would be like USD 90-100. And so the main use cases right now are just people speculating on other stuff within crypto. And I think to get out of that and to build stuff that people want to use outside of that, the costs need to come down a lot and it needs to be much faster to use. People aren’t going to be comfortable waiting five to 10 minutes for a transaction to go through. They’ll want to sort of see it instantly…or within a few seconds. And so those are I think the big problems.”
Oracles are services that are designed to feed external information into blockchains for interpretation and have become a hot topic lately, with projects like Chainlink and Band. Krug discussed the hype around oracle projects.
(33:55) “For the Oracle problem, it’s really a tough problem. And the main criteria that surrounds the problem is, ‘how fast do you need the data?’ If you don’t need the data at a very high frequency, things like Augur really are the best solution for that…but if you need some data that’s updated every five minutes, today you pretty much have to use something like Chainlink, or you could do it yourself, which is sort of what Compound has done. You can get a group of people to provide the results and take the median of them…which is actually what MakerDAO does. But they all sort of converge to a very similar system. I think the problem with all those approaches is that unless you do something beyond that, it’s not very secure.”
Krug shared what he is paying the most attention to these days.
(41:11) “I’m excited about the growth in decentralized exchange volumes. I think that’s something that there’s hype right now but it’s going to become a longer term sustainable trend I think that continues to grow. I think peer to peer lending protocols…are interesting as well, stuff like Compound, obviously a lot of the high numbers right now are due to the fact that you can earn COMP but I think a lot of it is actually just legitimate demand as well…And then the last thing I’m excited about, I’m excited to see some of these options and derivatives protocols and stuff go live…I think all of these interesting DeFi applications are things that I’ve been interested in for the whole time and a lot of them are finally starting to go live.”