Headline: Institutional money still shies away from perp DEXes — security, KYC and product gaps to blame, panelists say
At Consensus Miami, a panel of traders and builders made it clear why perpetual-futures decentralized exchanges (perp DEXes) have yet to win over institutional investors: recurring security exploits, a fundamental mismatch with institutional KYC/compliance needs, and lagging product innovation.
The session, “Perp DEX Explosion: Bullish Volumes & Bear Market Resilience,” featured Wizard of SoHo (trader and family-office manager), Michaël van de Poppe (founder & CIO, MN Fund / MN Capital) and Michael Anderson (Canary Labs), and was moderated by Jason Atkins, chief commercial officer at liquidity provider Auros.
Security headwinds and recent exploits
Panelists flagged high-profile hacks — most recently the multi-million-dollar exploit of Drift — as a central deterrent for large firms considering perp DEXes. “How do you convince the big institutional players to go on the perp devs? … that’s going to be the biggest challenge, especially given the exploit on Drift,” Wizard of SoHo said, noting a pattern of security incidents that undercuts institutional trust.
A “minefield” for institutions
Canary Labs’ Michael Anderson described DeFi as risky terrain. Although he’s explored parts of the ecosystem, he said he’s “scared to use DeFi right now,” likening it to “waiting for the next headline each day.” Anderson pointed out that while activity has increased in some pockets—particularly in Asia, where tighter KYC enforcement on centralized exchanges has pushed some flows—large institutions still prefer centralized venues because they offer clearer controls, custody and compliance pathways.
KYC and the permissionless problem
A core tension is structural: DeFi’s permissionless, pseudonymous design clashes with institutional obligations for full KYC and compliance. “Crypto wants to be more non‑KYC,” Anderson said, “but to bring on institutional [players] you need to have some form of KYC at the larger size.” Panelists signaled that without robust identity and compliance solutions, it will be hard to scale institutional participation on perp DEXes.
Product gaps vs. centralized rivals
Beyond security and compliance, panelists argued that perp DEXes lag in product sophistication. Centralized venues are integrating advanced trading infrastructure—bots, execution tools and richer futures tooling—that institutions rely on. Perp DEXs will need to catch up on tooling and integrations to be competitive.
AI trading: evolution, not revolution
The panel also touched on AI-driven trading. Van de Poppe framed AI agents as the next evolution of algorithmic trading rather than a completely new paradigm: “AI agents are just the next level of algorithmic trading… it’s just a little different execution.” He warned, though, that results depend heavily on how AI is deployed: poor context or frameworks will “build a bad trader for you.”
Broader market structure themes
Discussion also touched on market-structure dynamics such as Hyperliquid’s dominance and the general push-pull between centralized and decentralized infrastructure as funds seek both liquidity and safety.
Bottom line
Panelists concluded that perp DEXes have work to do before they can attract significant institutional capital: improved security and auditability, practical KYC/compliance solutions, richer product tooling, and clearer custody/legal frameworks. Until those pieces are in place, institutions are likely to continue favoring ETFs and centralized exchanges for crypto exposure.
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