​DeFi platforms revenues rise by 231% after FTX’s collapse

What’s new? According to The Block, decentralized finance (DeFi) platforms saw a 231% increase in revenue to $7,33 million from October 31 to November 11. The increase is likely due to the collapse of the centralized crypto exchange FTX. After the bankruptcy of the FTX Group, owned by Sam Bankman-Fried, the crypto community switched to the DeFi sector because it is independent of third-party participants and relies on smart contracts. Some in the industry said that the collapse of FTX will have a positive impact on decentralized platforms. Cryptocurrency hedge fund Pantera Capital, for example, issued a note stating that the current crisis has shown how opaque and often unreliable centralized intermediaries of financial transactions are as opposed to decentralized protocols.

The Block’s data

What else did Pantera Capital say? Pantera co-CIO Joey Krug said that the fund’s approach to crisis situations is primarily aimed at maximizing portfolio protection. Pantera aims to minimize “exposure to centralized counterparties in general” while providing trading flexibility, he said.

According to the statement, Pantera’s main risks/losses are related to the proceeds of the Blockfolio app acquisition, denominated in FTT and FTX stock. Krug said the fund liquidated most of the exchange’s native tokens on November 8. Before the FTX Group collapse, Pantera’s position in FTX equity and FTT tokens represented less than 3% of the company’s total assets under management (AUM).

Pantera emphasized that current events “made more obvious 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 will be required when such entities are “subject to stricter oversight of reserves, audits, and risk controls,” the note says.

“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,” said Joey Krug.

For more details on how user attitudes toward centralized crypto platforms changed, read GetBlock Magazine’s article.