The crypto industry finds itself in an interesting spot right now. It has matured quite a bit in the last 3-4 years, developing massive growth. It has also built along with that an impressive range of features, ecosystems, use cases, and entire markets. But it does not yet have the stability of the TradFi system, at least not across the board. Larger investors and institutions especially have to be very careful where and how they invest in the crypto industry, as multiple collapses have proven in just the last few years. The question is, has the industry grown enough to build “Goldilocks Zones,” areas of the industry where there is the substantial safety and security expected of TradFi, but the higher growth opportunities that the Crypto market is known for?
It is possible that these Goldilocks Zones do exist, and that they are designed especially to serve the institutional investors and high-value traders who need that additional security and permissioned service. If so, then dYdX’s upcoming Unlimited launch certainly claims to fit in this niche category. Let’s explore what this launch will offer these more discerning clients and see how permissioned features may provide exactly the type of control needed to balance an institutional player within a decentralized industry.
dYdX Unlimited, coming soon.
— dYdX (@dYdX) August 13, 2024
With a range of new groundbreaking features, this will be the biggest upgrade to dYdX Chain since launch.
🧵 Here’s what you can look forward to pic.twitter.com/f5savJAIwx
Unlimited Means Security and Permissioned Access
The launch of Unlimited is not just one product, but a series of elements that tie together a larger service for the dYdX platform. In working to provide more options for their community, dYdX has sought to introduce the first permissionless market listing, meaning that anyone can introduce new token pairs without waiting for governance approval. Supporting this unique feature is a liquidity feature called MegaVault, which consolidates liquidity for all markets and applies it where needed, ensuring that the markets are covered efficiently. Backers, both individual and institutional, are able to earn immediate yield through this pool, offering another form of return for users of the dYdX ecosystem.
The biggest features for institutional and high-value investors, however, are likely the permissioned keys and related customizations offered through the Unlimited release of features. The permissioned keys are a sight for sore eyes when it comes to the institutions trading on Web3, as well as high-value traders who use teams to aid their investment strategies. According to dYdX, permissioned keys are completely customizable, allowing the account owner to add users who can each perform a unique set of permissioned tasks on the institutional account. You can decide who can deposit and withdraw, who can trade and at what amounts, what wallets can be accessed by each member, and more.
For the institutes wanting to integrate even more closely, the dYdX platform offers the opportunity for full third party integration, providing access to the business development team directly in order to better understand the needs of larger customers and to ensure that integration is both efficient and secure.
Changing the Landscape
The move by dYdX seems to be a very positive direction, and hopefully it will be noticed by others in the industry as well. For institutional and high-value traders, the current ecosystem needs to find more ways to integrate and solve the key problems faced by these clients. The platforms should especially work to ensure that the services are secure, not just on the side of the Web3 platforms and blockchains themselves, but even in the ways that the investment houses operate their accounts. Using high security, permissioned access is a strong step in this direction.
The crypto industry has long been one of the lone traders, working to find a winning strategy by trading, staking, farming, or taking part in some other crypto process. However, while this will likely always hold a key place in the industry, the role of crypto in the wider global stage must expand if we hope to gain a proper widespread coverage through mass adoption. Much of this adoption, especially in terms of the value involved, will be harnessed through institutions and their substantial portfolios. In order to attract these larger players in the market, dYdX and others must continue to look for ways to meet the unique needs of these clients. The list of needs will likely not stop with permissioned keys, but this is an important place to begin as it helps to establish the right focus on a group trading with a collective stack of assets. Once the security of this feature is proven and clients have a better feel for the ease of use, its likely that the Web3 platforms will look at what the next big need will be for these clients. At the same time, they will continue to focus on the must-have elements of trading such as top quality security, intuitive UI’s, high throughput and low fees, and a strong web of connections that reach out safely to many other Web3 ecosystems.
Next Steps
Before the market can run, however, it needs to walk, and creating the permissioned keys on a proven, secure platform is an excellent way to establish this roadmap for the institutional client in Web3. Expect to see more platforms working to build up these necessary features for institutional clients, and expect more TradFi and other larger institutes to test the waters within the Web3 industry. Assuming the products perform well, this type of adoption will be significant in attracting heavy players into the market, gaining strong momentum toward the mass adoption the Web3 community is counting on.