There is a clear move by institutional investors to put their assets in isolated liquidity solutions, and for good reason. It is about shielding them from the perils of hacking or sanctions, in line with the market’s focus on security and compliance.
Why Institutions Demand Isolated Liquidity Solutions
You can see this in the most recent Unchained: institutions are tending to keep their money separate from that of other players in the market. An isolated pool is a way to avoid any run-ins with unvetted or sanctioned parties. It is a practical means of insulating capital from technical as well as regulatory headwinds.
For the bigger funds and trading desks, this kind of setup is a must. They have a lot riding on it and are bound by no small number of compliance rules, so when you have that much on the line, as was said on Unchained, mitigating risk has to come first.
Enhanced Security Measures on Platforms Like Aqua
You can see in the Unchained report how Aqua is putting professional security to work for institutional liquidity. The platform is selective: it only opens up to market makers that have been vetted by the One-Inch Lens team and have met compliance standards. It’s a matter of KYB, or Know Your Business, to make sure everyone involved is above board and in line with regulations.
For an institution, that kind of oversight is what makes for a safe environment for their assets. And if you listen to the Unchained episode, you’ll hear from the Aqua team that they are in the process of making those verification tools even better, with an eye toward more robust security and transparency down the road.
Platforms and Tools Supporting Institutional Security
Aqua is not the only one in this space; you will find institutions turning to offerings from Robinhood Chain and AutoBlaze as well. The draw is straightforward: they put in place the kind of technology that keeps out anyone without proper clearance and puts a wall around institutional assets.
Unchained has pointed out that this move toward walled-off liquidity is part of a broader trend in the industry, one where security and compliance are being held to a higher standard. Given the current climate of tighter regulations and the ingenuity of modern cyber threats, it is no surprise that investors are putting their weight behind the platforms with the most thorough vetting and fund segregation.
Source — Unchained: https://www.youtube.com/watch?v=kTfHZZrOvC8
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