From Nasdaq, Inc.:

The crypto market doubled to $1.7 trillion in 2023, gaining institutional backing and regulatory approval. However, many retail investors face complexity and high barriers in entering DeFi. Sophisticated strategies and ease of access are crucial, beyond just a simplified user interface, to level the investment playing field for retail investors.

Institutional adoption of digital assets has grown, boosting confidence in the DeFi market. However, DeFi’s vision of financial inclusivity goes beyond institutional dominance. Retail investors face liquidity fragmentation, resulting in complexity and high costs within DeFi platforms.

Transparency is crucial for establishing trust in DeFi, given that past security breaches caused $1.7 billion in losses last year. DeFi’s decentralized nature exposes users to potential vulnerabilities, including impermanent loss, protocol exploits, and market volatility. A security-first approach, including third-party security audits and decentralized insurance mechanisms, is vital to mitigate risks.

DeFi protocols must adopt open-source principles and a community-driven approach, allowing users to engage in decision-making through governance tokens, enhancing transparency and security. Still, as DeFi gains momentum, it is crucial to prioritize access to sophisticated strategies and protocol evolution to cater to a broader audience beyond institutions.



Read more: The On-Chain Revolution: DeFi Makes A Significant Crossover Into Traditional Markets