Ep. 40: Joey Krug - Investment Lessons from Traversing the Boundaries Between Traditional and Decentralized Finance

Joey Krug is the co-CIO at Pantera Capital, the first U.S. institutional asset manager focused exclusively on blockchain technology, with 4.1bn assets under management.

Joey is also the co-founder of the Forecast Foundation, contributing to the development of Augur (a decentralized oracle and prediction market protocol).

Joey is a pioneer in the world of blockchain finance, and I want to take this opportunity to discuss two leading questions: how might the final takeover of defi (decentralized finance) over tradfi (traditional finance) look like?

What are the barriers we need to overcome?

As the co-CIO of the largest institutional crypto investor in the world and a private angel investor, few people have traversed the two worlds more than Joey.

This gives Joey a unique set of sometimes surprising insights.

For example, the liquidity of token investments is a double-edged sword. Token investments provide investors with more flexibility but investments with more extended holdup periods tend to perform better.

Pantera's most successful investments were from their venture fund.

The big win for defi would be to do away with the bloat of large banks: real estate footprint, manual transaction processing, and regulatory compliance.

We discuss regulatory compliance extensively. The problem in tradfi is that legal norms evolve around the assumption of centralized entities developing regulations, but many of the necessary guardrails can instead be written in code.

The problem with tradfi is not lack of financial products. Many traditional financial products, like mortgages or stock market exchanges, do make sense to Joey.

What defi can instead do is participation in the system can be more global, more 24/7 (although that's not only an advantage), and more efficient.

One of the key things to get right to make defi more available is to make it more user-friendly to the average consumer - a lot of work remains to be done.

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