There are significant obstacles to further development of the crypto and digital assets industry. But hope comes in the form of improved transparency and multi-party supervision, which are critical to the journey of the space going forward. This can be delivered through a hybrid platform which sees centralised and decentralised finance working together towards a common goal.
There are significant obstacles to further development of the crypto and digital assets industry. But hope comes in the form of improved transparency and multi-party supervision, which are critical to the journey of the space going forward. This can be delivered through a market structure where exchanges, brokerages, custody, clearing and settlement, and other parties can effectively supervise one another.
“Traditional investors come to the crypto industry to seize the opportunity to market excess earnings, but the FTX collapse revealed that the industry infrastructure is very unstable and there is a risk of losing their principal,” explains Jack Yang, founder and CEO of LTP, LiquidityTech Protocol, “The imperfection of these infrastructures will hinder traditional investors from entering this market.”
This means the market structure needs to be reformed in order to stimulate further growth.
From the experience in traditional finance markets, the only way to establish a market structure where exchanges, brokerages, custody, clearing and settlement and other parties supervise each other was through centralised finance (CeFi). Its high efficiency and low thresholds are still indispensable.
In order to improve CeFi in the digital asset market, it is important to establish a more transparent, safe, and stable market structure. One way to achieve this is also to separate brokerages, custody, clearing, and settlement functions from centralised exchanges. By adopting these measures, we can create a more trustworthy and secure environment for trading and investing in digital assets.
“The industry is seeking a long-term model which is sustainable and participants are looking at DeFi as a credible alternative,” Yang observes, “
“Decentralised finance (DeFi) has made significant progress, while it has not yet reached the level of maturity necessary for widespread adoption. Three major challenges currently hinder the development of DeFi: security vulnerabilities, high barriers to entry, and non-compliance with regulations. If these issues are addressed, DeFi will continue to gain widespread acceptance and use. In the long run, the industry will trend towards Defi. In the short term, CeFi will continue to play a dominant role.
CeFi’s high efficiency and low threshold are essential for establishing a market structure where exchanges, brokerages, custody, clearing and settlement, and other parties can effectively supervise one another. This is the only way to ensure that the market operates successfully and effectively. LTP aims to build the best trading infrastructure to help institutional users efficiently deploy their businesses on Cefi and Defi platforms”
Yang notes this is the key way of building investors’ confidence in the industry following the crash of Luna and subsequent collapse of FTX: “When events of this sort occur, the repercussions are catastrophic and strengthen the arguments of regulators for greater transparency and regulation in the cryptocurrency arena.”
It is indisputable that regulation is necessary for accountability, but Yang warns that its implementation should not be excessive or unnecessary to the point where it stifles innovation. Self-innovation is more effective and faster than regulatory changes. Companies should continuously strive for improvement to stay competitive in a rapidly-evolving market.
From its perspective, LTP is collaborating and integrating with exchanges and custodians to build a transparent, multi-party supervision system for custody, clearing, and settlement. This allows users to securely entrust their funds to custodians, trade on exchanges, and have the assurance of accurate clearing and settlement by LTP. This makes the entire process of asset deposits and withdrawals more secure and controlled. It is also supported by a powerful policy and workflow engine to create a safer and more secure operational environment. LTP has integrated digital asset custody, transfer and settlement technology provider, Fireblocks, to its platform in order to do this.
Yang says: “With the Fireblocks integration, we were able to develop a one-of-a-kind institutional product that enables institutional investors to construct diversified portfolios by leveraging the Fireblocks Network for greater capital market connectivity, as well as fast and secure on-chain settlement. In addition, we are rapidly expanding our DeFi coverage by integrating new technologies and forming new collaborations.”
Jack Yang, founder and CEO of LTP, LiquidityTech Protocol – Jack has extensive experience in the fields of crypto quant research and investment. Jack began his career at TokenInsight, one of the most reputable crypto research organizations to date. He later became a partner in the company. During his tenure at TokenInsight, Jack co-founded Blofin, a digital asset investment firm with a management size of over $200 million. Moreover, he established the largest crypto quant fund database in the Asia-Pacific area and the largest Quant Trading competition in the crypto industry. He is excited about the future of blockchain technology, digital assets, and their potential to radically transform the world.
