Today's Regulatory Framework
The crypto community has benefited from the assumption that the majority of capital held belong to individuals. Yes, there have been hedge funds in the $10-250M in assets acting as whales, but this nothing compared to the real institutional capital:
BlackRock: $6.8T
JP Morgan: $3.8T
Goldman Sachs: $1.2T
Yes, that "T" stands for trillion. We have been blessed with starting an economy without the bias of winners from our prior economic institutions. However, the policy frameworks from governing bodies across the globe will allow for these institutions to begin their induction. If you take a look at anyone of the above's career posting pages, you'll see an ocean of positions available in preparation for their participation.
The Positive
The induction of regulatory frameworks will allow for people locked out of the current banking and financial models to prosper from DeFi. The everyday investor will forget the narrative preventing consideration and have the confidence to become involved from trusted institutions' approval. Countries without stable financial ecosystems or developing nations that already transact using cash of reserve currency nations, can transition to digital ecosystems.
The Problem
The adoption of regulatory frameworks through creating a nation's digital coin, or defining what they consider to be a stablecoin, will allow institutional players to enter the game. While we will benefit from the massive inflow of capital from institutional adoption - mutual funds, retirement/pension funds. However, bad actors can also perform regular OHM dumps on LPs to slowly drive down the price (common in equity markets) to dry up support. High frequency swaps to drive up or dry up APY. I could go on, but we should be prepared for the bad actor behaviors present today in the regulated markets.
DAO Solution Time!
As we face these new market participants, we will need to consider the attack vectors that POL with multi-billion dollar adversaries to ensure that our greatest strength is not used against us.
Time to discuss!
