'They start with bitcoin:' Polychain's Olaf Carlson-Wee believes big investors will turn their attention to DeFi

Episode 4 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Olaf Carlson-Wee of Polychain Capital.

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"They start with bitcoin. It is the easiest to understand."

In the most recent episode of The Scoop, Olaf Carlson-Wee said that recent headlines about institutional investors making waves in the bitcoin market aren't surprising to him. Since he launched Polychain Capital in 2016, he's become familiar with new market entrants who start by exploring bitcoin and then ultimately make their way to other ecosystems. 

"It isn't surprising that these big institutional investors are first getting involved with bitcoin," he said. "This is effectively electronic gold. And everyone can reason about gold and reason about the value of gold in a pretty simple way."

From Anthony Scaramucci to Paul Tudor Jones, the bull case for bitcoin as digital gold has been all but cemented as a Wall Street talking point. Yet this interest in bitcoin will find its way to DeFi, Carlson-Wee argues.

"Once you have $100 million of bitcoin, you might start to think how I could get yield on this bitcoin for example," he said. "A lot of the time the answer there is through on-chain financial contracts."

Carlson-Wee also believes that interest in DeFi products and services will buck the example of the 2017 ICO bubble and be more long-lasting.

As he put it during the interview:

"The summer of ICOs was a summer, the summer of DeFi was just the beginning of multi-years of compounding growth. The financial engineering in DeFi, I think, at this point is inarguably moving faster than the financial engineering anywhere else in the world. The capital coordination is faster than anywhere else in the world. A lot of these DeFi protocols are bigger than IPOs—regularly. Despite that go regularly unnoticed and are hard to interact with. The user experience barriers here are very high and despite that we see significant traction in terms of volumes."

Still, Olaf-Carlson Wee said DeFi market participants need to work out the UI problems that make platforms difficult to use. In this episode of The Scoop, Olaf Carlson-Wee digs into:

  • The differences between the ICO boom and the current market rally
  • How DEXs went from being irrelevant to facilitating billions of dollars in volumes
  • Where DeFi goes next
  • What he thinks about the upcoming Coinbase IPO
  • YFI's recent proposal to increase inflation 
  • Polychain's lessons learned from the previous 2017 cycle 

Listen to this week's episode on Apple, Spotify, Google Play, Stitcher or wherever you listen to podcasts.


© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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