Mike Novogratz, founder of Galaxy Digital, claims that fraudsters and schemes of rapid enrichment in the space of decentralized finance cast a shadow on the cryptocurrency industry.
"Similarly, many ICOs have brought bad publicity to the crypt. Many pyramid-like coins have appeared," he said in a conversation with Bloomberg. - This is a kind of gambling of money. Some lessons will be learned, but this is not very good for the ecosystem.
Novogratz noted that at the peak of popularity, the hype around ICO resembled a fever, which caused many investors to make stupid decisions. The mania about DeFi is beginning to subside with the decline in the rates of relevant tokens, he added.
At the same time, Novogratz is confident that full-fledged DeFi applications will lead to a drop in intermediary business in the financial industry. For this reason, Galaxy Digital decided to become a minority investor in ParaFi Capital, which invests in DeFi space. Other ParaFi investors include Bain Capital Venture and Henry Kravis, co-founder of the multi-billion dollar private equity fund KKR & Co.
"This may be 5% of our capital, roughly, so it's not a huge bet. My intuition tells me this is a really important part of the ecosystem," he said.
ParaFi began investing in DeFi space in 2018. Its portfolio includes projects such as Compound, Aave and Uniswap. Venture company Andreessen Horowitz has delegated its management rights to Compound.
About three months ago, Galaxy Digital formed a team specializing in DeFi and has already invested in half a dozen projects, including the aggregator of decentralized exchanges 1inch.exchange, Novogratz said.