The Bank for International Settlements (BIS) has revealed that institutional players dominate liquidity provision on decentralized exchanges (DEXs) like Uniswap.
An analysis of Uniswap v3's liquidity pools showed that institutional players in DeFi replicate strategies from traditional finance, giving them a competitive edge over retail participants.
Institutional players actively adjust their positions during volatile periods, while retail participants rarely make similar adjustments, leading to lower profitability for retail participants.
The dominance of institutional traders raises questions about whether DEXs truly deliver on their promise of inclusivity and equal opportunities for retail participants.