Decentralized finance (DeFi) has caught the attention of institutional investors, but they remain cautious due to the risks involved in on-chain transactions. Fireblocks, a company focused on digital asset security, is addressing these concerns by introducing new features to its platform. Shahar Madar, the Vice President of Security and Trust Products at Fireblocks, explained that institutional investors have to consider the unknown and unpredictable nature of DeFi engagements, which holds them back from fully participating in the space. Despite these risks, Madar reported that institutional DeFi trading on the Fireblocks platform increased by 75% in the first quarter of 2024, reaching nearly $4.5 billion.
DeFi currently has $95 billion locked in total value, making it an attractive target for attackers. Madar noted that sophisticated attackers are drawn to the substantial sums involved. In the first quarter of 2024, around $336.3 million worth of cryptocurrency was stolen in hacks and scams, which is a decrease from the $437.5 million stolen in the same period of 2023.
To enhance security for institutional investors, Fireblocks has introduced two new tools to its institutional DeFi suite. One tool called “Transaction Simulation” allows users to preview the impact of a smart contract on a wallet before it is signed. The other tool called “DApp Protection” analyzes contracts for malicious elements and notifies users of suspicious smart contracts.
According to Madar, for DeFi to attract institutions, it must prioritize security, user-friendly interfaces, and effective risk management. He believes that these improvements could change the perception of DeFi and the entire industry. Institutions are increasingly interested in staking, restaking, and tokenizing real-world assets. Fireblocks users are actively engaging in activities such as swapping, lending, staking, and bridging on decentralized applications like Uniswap, Aave, Curve, 1inch, and Jupiter.
Traditonal finance players also see potential in DeFi, particularly in the tokenization of real-world assets. They aim to leverage DeFi’s infrastructure to establish a safer financial ecosystem with reduced counterparty risks. Fireblocks is working to address the risks associated with DeFi and make it more appealing and secure for institutional investors.
Increased institutional DeFi trading means nothing if the risks outweigh the potential rewards. Stay away!
Security, user-friendly interfaces, and effective risk management are key to attracting institutions. Fireblocks gets it!
DeFi needs more than just improved security. The entire concept is too risky for institutional investors.
These new tools from Fireblocks may be helpful, but they can’t eliminate all the risks associated with DeFi. It’s just not worth it. 🤷♀️
Traditional finance players recognizing the potential of DeFi is a big step forward. Exciting times ahead! 🌟💼