Institutional investors have increasingly gained exposure to bitcoin and other major tokens through ETFs and centralized exchanges.
However, they have largely stayed away from decentralized exchanges (DEXs) that offer (rogue) perpetual futures linked to crypto and trading assets, panelists at Consensus Miami said, citing security risks and a mismatch between DeFi’s permissionless design and institutional identity and compliance requirements.
The session titled “Perp DEX Explosion: Bullish Volumes and Bear Market Resilience” featured Wizard of SoHo, a veteran trader and family office manager; Michaël van de Poppe, founder and CIO of MN Fund & MN Capital; and Michael Anderson of Canary Labs. Jason Atkins, chief commercial officer at liquidity provider Auros, moderated the discussion.
The discussion focused on perpetual decentralized exchanges and what it would take to attract institutional capital and scale.
Wizard of SoHo said that institutions are unlikely to easily transition to rogue DEXs due to the recurring security/exploitation risks highlighted by the recent multi-million dollar Drift hack, and that the next big competitive battleground for all rogue DEXs will be whether any of them can safely incorporate institutional capital.
“How do you convince the big institutional players to get on board with the criminal developers? I think that’s going to be the biggest challenge, especially given the exploit in Drift. And, you know, we’ve had a lot of exploits lately,” he said.
Canary Labs’ Anderson took a cautious tone about decentralized finance, saying he is reluctant to use it despite having explored parts of the ecosystem.
“I’m afraid to use DeFi right now,” he said. “It feels like a minefield and you’re waiting for the next headline every day.”
Anderson added that while activity has increased in some areas, particularly in Asia amid stricter KYC enforcement on centralized exchanges, the overall environment still feels risky.
“Right now, it looks a little dangerous on the product side,” he said.
Anderson argued that risk perception makes it difficult for large institutional players to adopt decentralized exchanges at scale, especially compared to centralized platforms.
“I think it will be very difficult for some of the larger companies to use it on an institutional level, compared to some of the centralized exchanges,” he said.
Anderson also pointed to product innovation gaps as another limitation, noting that centralized exchanges are increasingly integrating trading tools, such as bots, into futures markets. By contrast, decentralized exchanges have yet to match that pace of development.
KYC, or know-your-customer verification, is another key point of divergence. DeFi is based on open, permissionless participation, where users can interact without formal identity checks or traditional onboarding requirements.
Institutions, on the other hand, operate under strict regulatory obligations and must meet all KYC and compliance standards, making such a permissionless model difficult to adopt at scale.
“Crypto wants to be more non-KYC,” he said, “but bring institutional [players] you need to have some kind of KYC in a larger size.”
The discussion also expanded to adjacent topics shaping market structure, including the rise of AI-powered trading tools and the dominance of Hyperliquid.
Michaël van de Poppe said that AI agents are effectively an evolution of algorithmic trading, rather than a fundamentally new concept.
“To be honest, I think AI agents are just the next level of algorithmic trading anyway, so it’s just a little bit different execution,” he said. In response to a moderator’s comment about the reduction of human control in automated systems, he acknowledged the shift in oversight but argued that direction is inevitable.
“Yes, there are some risks, but I think at the end of the day, we are no longer going to operate with ourselves. Nothing will be manual,” he said. “AI agents will do it for us and will probably be better.”
van de Poppe added that the technology is still nascent and largely depends on how it is implemented.
“If you start using those AI or LLM protocols and don’t put them in the right context or framework, you’re going to become a bad trader,” he said. “So if you’re not a good trader, then it won’t make you anything.”
