Venture capital firm Pantera Capital, which manages around $3.8 billion in assets, predicted decentralized finance (DeFi) would be the future of the crypto market.

In a letter to investors titled "The Year Ahead," the company's CEO and co-CIO Dan Morehead said, "Blockchain is going to change the world. It will certainly survive these issues," referring to the recent crypto market downturn caused by high-profile exploits and bankruptcies.

Co-CIO Joey Krug added he believed the world's financial systems would eventually be based on blockchain and smart contracts.

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He also highlighted scalability systems have brought transaction fees on the Ethereum blockchain to under 10 cents and expected them to decrease further to around one cent in the future, which would make decentralized exchanges more competitive with centralized exchanges.

Krug envisioned a future where the average person can access DeFi through apps on their phone, with lower fees, global liquidity and 24/7 markets, but noted this required solutions to current issues such as increasing liquidity in DeFi and making it more user-friendly for those new to crypto.

He suggested getting more institutional capital into DeFi through federal or state-regulated custodians, and aggregating liquidity across multiple chains and liquidity pools.

He also highlighted that there was room for improvement in crypto wallets, user experience, and fiat on-ramps.

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Photo: Den Rise via Shutterstock