Paribus Joining the Mainstream

As the crypto market undergoes another capitulation event the dangers of high leverage and over-investment in illiquid assets once again dominate the mainstream news. It seems the only time the general public read about crypto is when something goes wrong. It’s a frustrating situation given the diligence and hard work that characterizes the vast majority of those involved in the space.

SBF’s dramatic fall from grace this week was preceded by an all too common pattern of overconfidence, and over-leverage. The shock waves are continuing to ripple through the markets and may soon signal the bottom of the current bear market.

Meanwhile, Elon Musk recently revealed his plans for Twitter during the latest Baron Investment Conference in New York where he said, “I really understand the internet…I know how to make a way better PayPal. There’s a product plan I wrote…in July 2000 where I thought it would be possible to make the most valuable financial institution in the world. We’re going to execute that plan from 22 years ago which amazingly no one has done. It’s part of why I think Twitter will be, ultimately, extremely valuable, because I’m going to execute the X.com gameplan…with some improvements.”

Around the same time, Sriram Krishnan, one of the general partners specializing in crypto at venture capital firm 16AZ was rumored to have joined Elon’s main team at Twitter. Sriram previously worked as an executive at Twitter, leaving last year to join 16AZ. Given that Elon wants to build a financial institution around Twitter and that he’s actively recruiting a crypto expert who also understands Twitter is a positive sign for future mainstream adoption.

Also this week CZ from Binance took a strong stance against SBF’s calls for regulating DeFi which gives hope that key industry figures are willing to fight to preserve the principles of decentralization. It’s a crucial aspect of crypto’s unique offering as Wilson, our COO explains:

“While many citizens trust their governments ability to protect their interests, the numbers are declining, as we have recently witnessed many examples of government overreach. People are realizing the importance of having full control of their money. The freedom that comes with blockchain technology allows individuals to work and cooperate in an open market, but does not require that person to trust a centralized entity who could potentially block their transactions at any moment. Decentralization will be the mechanism which allows trust in future monetary systems.”

The trustless aspect of crypto, the principle that people can interact and transact with each other without requiring a third party to act as intermediary, is a key tenet of most projects. It’s also an aspect that’s under threat from central bankers such as Christine Lagarde, the President of the European Central Bank.

During a recent conference entitled, “Opportunities and Challenges of the Tokenization of Finance”, she said, “If a digital euro is overused for instance as a form of investment it could crowd out commercial bank deposits and affect credit intermediation in the economy. While we talk about DeFi…and finance determined by protocol. The way we are thinking about it includes actual intermediaries, and makes sure that commercial banks are part of the system.” She also added that over 100 central banks are currently investigating how to launch their own CBDCs, or digital currencies.

Given the fervor by which central banks and private banks are embracing blockchain technology it’s obvious that mainstream adoption of crypto for payments is on the horizon. The other aspect of crypto that’s also gaining traction is the virtual space of metaverses.

Simon, our CTO explains, “I believe that as technology becomes more deeply ingrained into our society more people will utilize metaverses for their day to day needs. In the world of a metaverse, having a way to make payments is a fundamental aspect of value transfer. Because these metaverses are open to a global audience, processing transactions can’t be dependent on one country’s payment rails. This is where blockchain technology comes in to serve as the medium of value transfer. “

One of the issues facing people when they first come to crypto is where to invest their time and money. At present if you invest in certain tokens you can leverage those in the form of a loan to expand your portfolio, but there are greater difficulties with unlocking the liquidity within NFTs and metaverse assets. It’s a fundamental issue that needs to be resolved and one that’s at the very core of our work at Paribus.

As Deniz, our CEO, describes, “If liquidity is locked within an asset, this is essentially potential value kept out of the market. The more liquidity that can be unlocked and transferred to additional resources, the more efficient the system becomes. Additionally this gives participants extended reach of their funds and allows them to diversify their portfolios. This increases the value in the ecosystems where they invest.”

Despite the panic in the markets at the moment, if we take the time to look at the fundamentals, it becomes clear that crypto is moving closer and closer to mainstream adoption. The present turmoil, although at times painful, may well be the process that weeds out some problems and galvanizes the people and projects that remain.