As decentralized finance matures into a multibillion-dollar industry, institutional investors are taking note. The potential for high returns and innovative financial products combined with 24/7 market access has made it an attractive alternative to traditional finance. However, the path to enterprise adoption is still fraught with challenges, particularly around issues such as security, compliance, and risk management.
Despite its promise, Defi has struggled to attract large-scale institutional investors due to significant barriers including compliance complexities and counterparty risks. Closing this gap requires solutions that combine the unique benefits of blockchain with the demand for rigorous enterprise and security. He enters Celestial bodiesLayer 3 carries these challenges to facilitate a wave of enterprise Defi adoption.
Orbs is by no means the only DEFI protocol laying the foundations for organizations to enter en masse. But it has arguably made the greatest progress to date in achieving this goal. He doesn’t just talk organizations on board in other words – he actually does it and the results speak for themselves.
What organizations really want
Institutional investors, from hedge funds to family offices, are looking for more than just profitable returns. They require Defi protocols that are in line with ever-evolving regulations around AML and KYC. High-profile hacks and smart contract exploits are a major concern, compelling organizations to seek solutions that demonstrate stringent auditing and robust security mechanisms.
There is also a pressing need for scalable solutions to handle the kind of scale and throughput that organizations expect to implement Onchain. As transaction volumes grow, it’s crucial that Defi platforms can handle activity without high fees or network congestion. All of this must be achieved while maintaining the decentralization that is at the heart of Defi’s entire value proposition.
Early enterprise-oriented initiatives like AAVE ARC offer closed pools catering to professional clients by implementing KYC/AML requirements, while custodial solutions like Anchorage Digital Asset Management cater under regulated frameworks. However, these methods often rely on spin-off environments or centralized brokers, diluting the trustless and decentralized ethics that underpin Defi.
Celestial bodies do things a little differently. Rather than simply slapping Kyc’d’s interface onto existing infrastructure, it created a framework through which institutions could participate without having to stake questionable return products or put millions into untested smart contracts. Instead, it allows them to take their greatest asset – liquidity – and leverage that to make an honest living on the coal face of crypto.
The Orbs Approach in Institutional Defi
Orbs differentiates itself from other enterprise Defi solutions by prioritizing decentralized capabilities and execution. One of the primary products developed by institutional grade celestial bodies for this purpose Liquidity positionsolved to direct liquidity to cross-protocols DEXs and PERPs. Although end users are typically retail traders, liquidity – which includes a combination of Defi and CEFI sources – has to come from somewhere. A good portion of it is provided by institutional players.
There are two opportunities for institutions to participate in this two-sided market and reap the rewards: through Onchain Solver auctions, where third parties compete to fill swaps using Onchain liquidity through their own inventory, and from central sources through APIs. Here, institutions and professional traders such as market makers can bid and compete to fill swaps.
But there are also other ways in which celestial bodies lay the foundations for institutions to be able to do something onshin. For one thing, orbs facilitate complex smart contract workflows, such as algorithmic trading and portfolio rebalancing, without the need for intermediaries. Organizations can easily implement high-frequency strategies and advanced financial operations. Its infrastructure is also designed to support compliance requirements, ensuring seamless integration into regulated financial frameworks.
Setting the stage for institutional flows
Davy’s future depends on its ability to attract and retain institutional capital. While today’s protocols excel at offering high returns and innovative financial products, many of them fall short in addressing compliance and risk management at the level that sophisticated investors expect. Layer 3 solutions like Orbs strike a balance between maintaining decentralization while meeting institutional requirements.
For example, Orbs can work alongside existing Defi protocols, allowing it to upgrade its infrastructure without re-engineering its entire stack. The ORBS network can implement rule sets that implement regional regulations, KYC/AML procedures, or other restrictions, to ensure that protocols remain adaptable to future regulatory changes. Finally, by facilitating off-chain calculations and automating smart contracts, ORBS helps organizations simplify complex financial strategies like options trading or hedging while maintaining on-chain recordkeeping.
Make Defi work for everyone
Institutions are not exploring Defi for philanthropic reasons such as deepening liquidity or buying retail portfolios. They are here for their own interests, which primarily means making money. But given the way Onchain economics work, their arrival in numbers is a net win for all users due to the benefits of bringing in larger amounts of capital which will allow Defi to compete with CEFI for things like order book depth.
Layer 3 solutions appear as a missing link in making Defi fit the bill, providing the scalability, security, and recoverability that organizations require. Orbs demonstrates this shift by offering a decentralized execution layer designed to meet the unique needs of institutional investors. If the industry can prove that innovations like the L3 architecture can meet the zero-trust commitment, it will finally be ready to welcome serious players with serious capital to deploy.
