The tremendous growth of Decentralized Finance’s money markets in recent years has later caught the institutional investors’ attention.
Who are institutional investors?
An institutional investor is a large organization that uses other people’s funds to invest on its behalf. They invest majorly in securities and other digital assets.
They include but are not limited to pension funds, insurance institutions, hedge funds, and investment banks. Non-retail investors have an incredible influence on the stock and digital market movement due to the large number of shares they move.
Why the DeFi Space?
DeFi is a way of creating passive income. According to Audrey Nesbitt, “there are tons of opportunities for non-institutional investors in the decentralized finance space, especially for creating passive income.” But presently not only limited to retail investors as institutional investors are getting their way into the DeFi space.
The three main reasons behind institutional interest in Cryptocurrency are the current historically low-interest rates, rate of inflation, and geopolitical variability. Investors are looking to move their funds to an industry with minimal or no interest rates to secure wealth in the long run.
The institutional investors focus more on the DeFi aspect of the crypto industry, even when the total market cap of all crypto assets is over $2 trillion.
In the digital currencies fiction world, Decentralized finance developers want to eliminate third-party influences in transactions, allowing for faster and relatively low transaction fees with no ambiguous paperwork.
Centralization should be a thing of the past as decentralization is the next stage for finance. As projecting investors continue to occupy the Decentralized Finance space, a decentralized economy seems unavoidable. Participating in the growing industry may be risky today, but what DeFi protocols learn now will be the basis of the comprehensive decentralized finance apps of tomorrow.
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