The case for institutional-grade tools for DeFi

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Accessibility to financial services has improved dramatically over the past decade. From online banking to mobile investment apps, more people can participate than ever before. little man. ‘

The data bear this out.For example, in the United States, the top 10% own 84% of all sharesAdditionally, retail traders consistently lose money against professionals, as evidenced by the facts below. less than 1% Out of the daily trading population, you will get profit as expected.

Even excluding day trading, the average individual investor below market About 1.5% per year. One important reason for this is that large institutions have always had the edge in access to information and technology. As a result, they can afford expensive data feeds and trade execution tools, as well as the salaries of highly skilled traders and analysts.

These same dynamics play out in cryptocurrencies and decentralized finance (DeFi). Understanding the rapidly evolving landscape requires institutional-level tools that are often out of reach for individual investors.

FTX’s Recent Collapse Gone million or more Retail investors taking money out of their own pockets is just the latest example of how the system wasn’t built for retail investors. While the platform claimed to be transparent, it turned out to be using its own token, his FTX, as collateral and failing to meet user demands when the details were made public. Did.

The Need for Institutional Tools

TradFi and DeFi institution-level tools are very different. In the traditional financial world, institutional investors have always had the edge when it comes to data and execution. They can pay for expensive Bloomberg terminals and trade on private exchanges for lower fees.

In DeFi, however, the playing field is much more level. A public blockchain provides a public record of all transactions that anyone can access and analyze. Additionally, decentralized exchanges (DEXs) such as Uniswap offer low-cost trading for everyone.

That said, retail and institutional investors still need tools to make sense of their data. The DeFi space is very complex, with a large number of protocols and products all garnering attention. As a result, it can be difficult to track your position, let alone analyze past performance.

Even large financial institutions commonly use tools like Excel or alternatives like Zapper and Debank. These tools only report an investor’s static position, not historical performance. Unfortunately, these tools are completely unsuitable for the task at hand.

This is where institutional-level tools come into play. These types of tools give investors visibility into their portfolios, including detailed performance reports and analytics. This data type is essential for understanding how your position works and making informed decisions about where to place your capital.

That said, a lot of work needs to be done to bring DeFi tools on par with TradFi. Primarily, ease of use is an important issue. Current tools are often complex and confusing, making it difficult for retail investors to get started. Additionally, many of the available tools are aimed at developers rather than traders and investors. This is a significant issue as it means that the average person is effectively shut out of the space.

Tooling method can Promote inclusion

When people talk about financial inclusion, they often focus on products and services such as credit and banking. But access to information and technology is just as important. This is where institutional-level tools can make a real difference.

By making data more accessible and understandable, tools can level the playing field for retail investors. With better data, retail investors can make informed decisions about where to allocate their capital. This, in turn, leads to better results for them.

Inclusion doesn’t just increase access to products and services. It’s also about giving people the knowledge and tools they need to succeed. His DeFi tools at the institutional level are an important step in this direction.

True financial inclusion in DeFi goes beyond making the platform available to everyone with an internet connection. We need to rethink how these platforms are designed and managed to meet the needs of a wide range of users, not just those with limited privileges.

Comprehensive design is good for business.a study Research by McKinsey found that promoting equality for women could add $12 trillion to global GDP by 2025, or 11% of global GDP.

The same principle applies to DeFi. By making our platform accessible and easy to use for everyone, we can create a level playing field where the best ideas win, rather than the projects with the strongest insider ties. Increased competition has already lowered fees and improved conditions for users overall. And as DeFi matures, we can expect further innovation and improvement in the products and services available.

We still have a long way to go to achieve true financial inclusion in DeFi, but the benefits of doing so are clear. , can create a more robust and vibrant ecosystem.

situation of DeFi tools

only around today 4.8 million DeFi walletsThis is just a fraction of the potential market for DeFi and represents an even smaller portion of the traditional banking population.

Not only are relatively few people using DeFi applications, but the amount of capital locked into DeFi protocols is still relatively small. $53 billionaccounting for just 7% of the overall cryptocurrency market cap of $800 billion.

With such a small user and capital base, it’s no surprise that the current state of DeFi tools is lacking. In addition, accessibility is generally reduced due to the large amount of jargon that is difficult to use.

For DeFi to reach its full potential, communities need to come together to improve education and make tools more accessible. This is the only way to ensure everyone has a fair chance to participate in the space. With better tools and greater inclusion, we can build a brighter future for all.

About the author: Ellie Aji Co-founder and CPO of VALK, building a powerful ecosystem of decentralized tools for smart trading and investing in DeFi for retail and professional users. Elie was previously an Entrepreneur in Residence at R3 and Blockchain Her Architect at BNP Paribas.

Posted In: Introduction, DeFi

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