Pantera Capital reflects on FTX situation and importance of DeFi in latest Blockchain Letter update Pantera Capital reflects on FTX situation and importance of DeFi in latest Blockchain Letter update
An official Pantera Capital 'Blockchain Letter' addresses FTX impact on the firm and the importance of DeFi.
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Updated: Sep. 26, 2023 at 2:44 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Pantera Capital CEO, Dan Morehead, posted a tweet late last night addressing the fallout of the ongoing FTX situation and how it highlights the importance of what Pantera is building.
FTX underscores the importance of what we are building here – a more efficient, decentralized, and open financial ecosystem.
As my co-CIO @joeykrug writes: "The journey may not always be easy or smooth, but it is necessary."
Thoughts on this week: https://t.co/WH3YJLBeVD
— Dan Morehead (@dan_pantera) November 11, 2022
Morehead’s statement is elaborated upon in the latest update to Pantera’s ‘Blockchain Letter’ — a monthly letter that covers a range of topics focused primarily on and around the blockchain ecosystem.
Updated Nov 11 by Pantera co-CIO Joey Krug, the latest addition to Blockchain Letter summarizes the FTX and Alameda Research fallout and the mitigations of permanent capital loss.
“Our approach towards situations like these first focuses on safeguarding the portfolio as much as possible.”
Pantera aims to minimize “exposure to centralized counterparties in general” while ensuring that trade flexibility is maintained.
Addressing the concerns surrounding their exposure to the FTX event, the firm explains that their main “risk/losses” are derived from their Blockfolio acquisition proceeds — denominated in FTT and FTX stock.
“We liquidated as much of this FTT as possible on Tuesday, November 8th. Prior to the collapse, on Monday night, our FTX equity and FTT token positions totaled under 3% of our total firm AUM.”
Having swiftly implemented precautionary measures after the FTX and Alameda fallout, Pantera speculates the likelihood of a regulatory response — though they are “cautiously optimistic it will yield medium- and long-term positive results.”
Reflecting upon the situation, Pantera highlights the “need for decentralized, trustless protocols that allow users to trade, hold, and transfer their assets without relying on entities like FTX, Celsius, or Voyager.”
The need for centralized intermediaries is acknowledged within the Blockchain Letter, suggesting the likely event that such entities will be “subject to stricter oversight of reserves, audits, and risk controls.”
“On a personal level, the implosion of FTX has reminded us of what we’re doing here. Our mission – as a firm and as an ecosystem – is not to replicate the risks and inefficiencies in traditional finance. It is to build a more efficient, decentralized, and open financial ecosystem.”
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Josh O'Sullivan
Josh has been writing for a decade and is passionate about mainstream crypto adoption, bringing positive financial change to the masses through crypto and decentralized finance as a whole.
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In this article
FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
Pantera Capital
Pantera Capital is an investment firm focused exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets..
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Dan Morehead is the founder of Pantera Capital Management LP, a leading investment firm focused on digital currencies and blockchain technology.
Joey Krug’s journey in the world of technology began in his middle school years when he started programming in Applesoft BASIC.
