Altcoins are going parabolic, but a VC says Bitcoin and DeFi will grow in “lock step” 🚨 This article is 4 years old...
Altcoins are going parabolic, but a VC says Bitcoin and DeFi will grow in “lock step”
2 min read
Updated: Jul. 22, 2020 at 1:14 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Unlike normal, the crypto spotlight has been focused on Ethereum’s budding decentralized finance (DeFi) ecosystem over the past few weeks, not on Bitcoin.
This is for good reason: as CryptoSlate data indicates, countless Ethereum-based altcoins related to this cryptocurrency sector have surged as BTC has stagnated. In the past week alone, the DeFi sector has gained 13.87 percent. Those gains have been concentrated in a few crypto players such as Aave’s LEND, Ampleforth (AMPL), Synthetix Network Token (SNX), and THORChain (RUNE).
With such strong growth over recent weeks, some have been asking if this is the end of Bitcoin’s dominance and the start of DeFi’s dominance. If you search up “Ethereum” or “DeFi” on Twitter, you see many of the blockchain’s proponents claiming that BTC is a “pet rock” while DeFi is the “real revolution.”
According to a venture capitalist and strong DeFi proponent, it is not the end of Bitcoin’s dominance. In fact, he expects these two sectors to grow in “lock step.”
DeFi and Bitcoin to grow in tandem? A VC thinks so
Imran Khan, an investor at the crypto-centric Volt Capital and a proponent of DeFi, says that he doesn’t expect DeFi to run away from Bitcoin in terms of growth.
“Bitcoin and DeFi will grow in lock step, I foresee the macro changes push Bitcoin’s flywheel aggressively. While DeFi being a sub flywheel,” Khan commented, indicating that growth in BTC is effectively needed to drive users and capital to DeFi.
He added that the two sectors of the cryptocurrency industry service two different “final bosses”: Bitcoin was built to usurp monetary sovereignty and DeFi was built to usurp traditional banking.
As currency and finance are inherently related to each other, growth in one will drive the other. (There’s a reason why the U.S. has the most dominant currency and banking/finance sector.)
Bitcoin and DeFi will grow in lock step, I foresee the macro changes push Bitcoin’s flywheel aggressively. While DeFi being a sub flywheel.
Bitcoin’s final boss: Monetary sovereignty
DeFi’s final boss: Traditional banking https://t.co/7cmfZhT2xd
— Imran Khan (@lmrankhan) July 19, 2020
Khan’s comment was well received by some in the industry.
But as one crypto trader commented, his comment doesn’t mean that the two will be locked at the hip on a short-term time frame:
“Caveat is timeline as well, as @HumboldtCap pointed out, it will be imperative to catch the right trend and risk-on at the right moment.”
Connecting the two ecosystems
For Bitcoin to grow in tandem with DeFi and vice-versa, arguably moves will need to be made to connect the two ecosystems.
As it stands, Bitcoin — and a majority of other top cryptocurrencies, for that matter — have effectively been cut out from the DeFi equation.
By connecting the two ecosystems — by connecting the reserve currency of crypto to the Wall Street of crypto, in Khan’s terms — growth is accelerated. As Steven Becker, president of MakerDAO, explained to Bloomberg about projects to link Bitcoin and Ethereum DeFi:
“tBTC is brilliant because ultimately it links two major concepts together. [Bitcoin and Ethereum working together] is how all these networks are going to come together to create the on-chain economy.”
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Synthetix
$2.19551
Synthetix, formerly Havven, is a cryptoasset-backed network that enables the creation of on-chain synthetic assets.
THORChain
$5.27829
THORChain is built for cross-chain permissionless digital asset liquidity.
Ampleforth
$1.02459
Ampleforth is a digital-asset-protocol for smart commodity-money.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.
Steven Becker is President and COO of the organization developing MakerDao.