Web3 and DeFi are gaining popularity among individual users, but large financial institutions remain cautious about entering these new markets. This article examines the key reasons for this approach and the disparities between retail and institutional participation.
The Potential of Web3 Trading
Web3 offers a new vision for global finance, based on accessibility and transactional transparency:
- 24/7 borderless markets. - Permissionless innovation opportunities. - Reduced reliance on intermediaries for faster transactions. - Transparency advantages over traditional financial systems.
Institutional Requirements for Web3
For large financial institutions to actively engage in Web3, they require high standards in several areas:
- Trade privacy, as open blockchains do not ensure confidentiality of trading strategies. - Security including protection against rug pulls and smart contract risks. - Scalability so large contributions do not impact market prices. - Regulatory clarity regarding compliance requirements.
Missing Features in Current DEX/DeFi Tools
Current decentralized trading tools may not meet the needs of large players:
- Weak compliance integration (KYC/AML). - User experience issues, including complex interfaces and lack of support. - Fragmentation across different networks and protocols. - Poor liquidity and slippage during large trades.
Major financial institutions remain hesitant to engage in Web3 due to infrastructure shortcomings and the need for compliance with strict quality standards. To successfully bridge the gap between DeFi and traditional finance, current issues regarding security, usability, and regulation must be addressed.
