Institutional investors are increasingly exposed to Bitcoin and other major tokens through ETFs and centralized exchanges.
However, they have largely stayed away from decentralized exchanges (DEXs) offering perpetual futures (perp) contracts tied to crypto and trading assets, Consensus Miami panelists said, citing security risks and a mismatch between DeFi’s permissionless design and institutional identity and compliance requirements.
The session titled “Perp DEX Explosion: Bull Volumes and Bear Market Resilience” featured Wizard of SoHo, a seasoned trader and family office executive; Michaël van de Poppe, founder and CIO of MN Fund & MN Capital; and Michael Anderson of Canary Labs. Jason Atkins, chief commercial officer of liquidity provider Auros, moderated the discussion.
The discussion focused on perpetually targeted decentralized exchanges and what it would take for them to attract institutional capital and grow.
Wizard of SoHo said that institutions are unlikely to easily transition to perp DEXs due to the recurring security/exploitation risks highlighted by the recent multi-million dollar hack of Drift, and that the next major competitive battleground for all perp DEXs will be whether any of them can safely onboard institutional capital.
“How do we convince large institutional players to turn to malicious developers? I think that’s going to be the biggest challenge, especially given the Drift exploit. And, you know, we’ve had a lot of exploits lately,” he said.
Canary Labs’ Anderson took a cautious tone toward decentralized finance, saying he was reluctant to use it despite exploring parts of the ecosystem.
“I’m afraid to use DeFi right now,” he said. “It feels a bit like a minefield, and you’re just waiting for the next headline every day.”
Anderson added that while activity has picked up in some regions, particularly Asia, amid stricter KYC enforcement on centralized exchanges, the overall environment still appears risky.
“Right now it looks slightly dangerous on the product side,” he said.
Anderson argued that the perception of risk makes it difficult to see large institutional players adopting decentralized exchanges on a large scale, especially compared to centralized platforms.
“I think it will be very difficult for some of the larger companies to use it at an institutional level, unlike some centralized exchanges,” he said.
Anderson also pointed to product innovation gaps as another constraint, noting that centralized exchanges are increasingly integrating trading tools, such as robots, into futures markets. On the other hand, decentralized exchanges have not yet followed this pace of development.
KYC, or know-your-customer verification, is another key point of divergence. DeFi is built around 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 this permissionless model difficult to adopt at scale.
“Crypto wants to be more non-KYC,” he said, “but to provide institutional solutions [players] you must have some form of KYC for a larger size.
The discussion also expanded to adjacent themes shaping market structure, including the rise of AI-based trading tools and the dominance of Hyperliquid.
Michaël van de Poppe said that AI agents are actually an evolution of algorithmic trading, rather than a fundamentally new concept.
“To be honest, I think AI agents are just the next level algorithmic trading anyway, so it’s just a little bit different execution,” he said. Responding to a moderator’s point about reducing human control in automated systems, he acknowledged the shift in monitoring but argued that this direction was inevitable.
“Yes, there are some risks, but I think ultimately we are not going to negotiate ourselves anymore. Nothing will be manual,” he said. “AI agents will do it for us, and they’re probably better.”
van de Poppe added that the technology is still early and highly dependent on how it is deployed.
“If you start using these AI or LLM protocols and you don’t put them in the right context or framework, it’s going to make you a bad trader,” he said. “So if you’re not a good trader, it’s not going to create anything for you.”
