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Asset Management is a multi-trillion-dollar sector, and we expect that ~$8-19T in assets (both web3-native & real-world) will be on-chain in the near future. There’s a strong need to use on-chain financial rails to manage these assets, and many professional asset managers are already exploring DeFi.
So, what’s stopping the adoption?
We have worked with 150+ crypto hedge funds, digital asset managers & other professional investors to understand their pain points when using a fully on-chain infrastructure:
- 1.Lack of liquidity for some trades on DEXes comparing to CEXes or OTC deals via Market Makers
- 2.Yield farming requires custom integrations with each of the DeFi protocols, which can take months/years and $millions spent on engineering & security audits
- 3.It’s challenging to create automated trading strategies in DeFi than to build an algo on top of CEX APIs (or CEX aggregators’ APIs)
- 4.No native sub-account/managed-account logic in DeFi, which means you need to either take full custody, have a shared multisig or use rigid non-custodial vaults
- 5.Unclear how to manage regulatory and compliance requirements for on-chain interactions
- 6.Lack of reliable omni-chain infrastructure makes CEXes still a preferred option for cross-chain trading, even for crypto-native funds
- 7.Lack of on-chain derivatives forces the use of CEXes for hedging & delta-neutral strategies
- 8.Complex & siloed RWA platforms that lack liquidity provide little benefit for managing real world assets on-chain
While DeFi infrastructure is maturing across the board, it still lacks the comprehensive, institutional-grade tooling that is suitable for professional asset managers.