Pantera Blockchain Letter, February 2021


“Free” trading apps like Robinhood aren’t free. They auction the ability to front-run their customers to the highest bidder. Hedge funds and High-Frequency Traders (HFTs) pay hundreds of millions of dollars annually to do just that. “Free” trading apps don’t work for their customers — they work for the hedge funds.

Ultimately their customers pay higher prices for their stock and receive lower prices when they sell. When the SEC charged Robinhood in December: “The order finds that Robinhood provided inferior trade prices that in aggregate deprived…

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Franklin Bi, Director of Platform & Kristie Huang, Intern

Welcome to the January 2021 edition of the Pantera Blockchain Blog!

Catch up with the Pantera community regularly as we share news announcements, job openings, industry trends, and interesting reads from the Pantera portfolio and the broader industry:

  • Portfolio News
  • Job Highlights
  • Free Time

by Franklin Bi and Kristie Huang, January 2021

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Crypto’s market maker shortage

Market efficiency requires liquidity. As digital asset trading volumes grow, liquidity providers need to evolve in tandem to maintain market efficiency. For smaller crypto token projects who are still early, liquidity is especially vital. Without enough trading volume and liquidity, investors are subjected to wider bid-ask spreads, higher price volatility, and higher risk. For larger institutional investors, liquidity is critical to ensure that sophisticated trading strategies can be deployed effectively.

In traditional U.S. equity markets, these liquidity issues are typically solved by high-frequency market makers, such as Virtu or Citadel Securities, who…

Pantera Blockchain Letter, January 2021


We began our deep dive on bitcoin halvings in our May investor letter — just after the 2020 halving date itself — like this:

“With the price roughly flat over the last two weeks, there’s a little bit of a ‘The Bitcoin Halving Happened and All I Got Was This T-shirt’ vibe in some of the comments. We have stressed that the halving is a big event — but it takes years to play out. The typical trough is 1.3 years before the Halving and, on average, the market peaks 1.2 years after. The whole process has taken 2.5 years.”

Pantera Blockchain Letter, December 2020


A Tiger Cub friend/TMT investor: “We don’t invest in bitcoin because there are no cash flows to discount.”

Me: “Well, there’re no cash flows to EUR/USD either, but nobody thinks twice about trading it.”

How do you value bitcoin?

An answer is: Bilateral exchange rates are just supply and demand.

I realize for some, that’s an unsatisfying answer.

In this letter we’ve taken two perspectives on supply and demand.

The first is an Econ 101-style supply and demand chart where:

The demand curve seems very price-insensitive. When people want in —…

by Franklin Bi and Kristie Huang, December 2020

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As the total billion-dollar value locked in DeFi reaches the double digits, more decentralized finance solutions and platforms have arisen to meet this demand. The allure of decentralized finance for users is simple: instead of relying on intermediaries to coordinate transactions, DeFi users trust in the integrity of peer-to-peer, decentralized exchanges.

The current state of DEXes

Decentralized exchanges (DEXes) forgo intermediaries to facilitate peer-to-peer transactions directly on-chain. Automated market makers (AMMs) are similarly decentralized protocols that enable users to transact without intermediaries — but instead of trading peer-to-peer, users are trading peer-to-pool. …

Pantera Blockchain Blog, November 2020

Franklin Bi
Director of Platform

Welcome to the November 2020 edition of the Pantera Blockchain Blog!

Catch up with the Pantera community regularly as we share news announcements, job openings, industry trends, and interesting reads from the Pantera portfolio and the broader industry:

Building in crypto is hard. It comes with the typical challenges of early company-building — recruiting, building, marketing, etc. And it also includes challenges unique to crypto, including but not limited to: new or changing tech stacks, open-source ecosystems, node infrastructure, decentralized communities, token design.


by Franklin Bi and Kristie Huang, Nov 2020

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In early 2018, serial entrepreneur and longtime Maker community member Fernando Martinelli started exploring mathematical frameworks for DeFi liquidity protocols as a research project. Uniswap didn’t even exist at the time — Fernando was simply searching for a better way to provide liquidity on his own terms. Eventually, Nikolai Mushegian, original architect of the Maker/Dai contract system, and Mike McDonald, creator of, joined Fernando to actualize the idea.

Out of their efforts came Balancer.

Pantera Blockchain Letter, November 2020


A divided U.S. government — Democratic White House, Republican Senate — would likely result in more pressure on the Federal Reserve to expand their balance sheet. This money printing will inflate the price of things whose quantity cannot be “eased” — like gold, bitcoin, real assets, and even equities.

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It feels like bitcoin is going to melt up here.

Pantera Blockchain Letter, October 2020


PayPal recently announced they are launching a new service that enables customers to buy, sell, and hold cryptocurrency directly from their PayPal accounts. They are also planning to break into the crypto-payments sector by allowing users to fund purchases with crypto at PayPal’s 26 million merchants worldwide.

This is one of the biggest developments for the industry this year.

PayPal has 300 million active users. That’s 300 million people who will have a direct onramp to cryptocurrency in the coming weeks.

In aggregate across PayPal, Robinhood, and Cash App, that’s 350 million people who can instantly participate in crypto without…

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