Compound founder Leshner on DeFi: ‘The institutions aren’t coming’

Permissionless panelists clashed on when — or whether — TradFi might enter the DeFi space in earnest

September 12, 2023 04:03 pm

Mashii/Shutterstock modified by Blockworks

As DeFi adoption fails to keep pace with its technological sophistication, the question of whether TradFi institutions are DeFi’s competition — or its white knight — is emerging.

At the Permissionless conference in Austin, Texas, on Tuesday, Compound founder Robert Leshner was unequivocal.

“I have a strong view here,” Leshner said. “The institutions aren’t coming.”

Leshner, now the CEO of blockchain finance company Superstate, argued that TradFi institutions want to use DeFi tech without buying into the token economy on which the ecosystem was built. In his view, DeFi’s onboarding of legacy financial firms will require the tokenization of traditional finance assets and a surrender on crypto-native assets.

“This is the big divide that is going to define the next ten years of DeFi,” Leshner said.

Pushing back, Blockworks co-founder Michael Ippolito pointed out that some TradFi institutions have already entered DeFi with crypto asset backing, noting Visa’s use of the Solana blockchain for settlement on the credit card giant’s USDC payment program.

The exchange perhaps highlighted a tension at the conference: that the crypto world both needs institutional adoption and regards it with suspicion.

When asked about Uniswap’s philosophy on its users, Mary-Catherine Lader, the DEX’s chief operating officer, said Uniswap is currently focused on its crypto-native users while building a product that can provide value to institutions in the future.

“[Uniswap is] not putting on suits and going to pitch JPMorgan tomorrow,” Lader said.

“No offense to anyone who’s from JPMorgan,” Ippolito added after a short pause, prompting a laugh from the audience.

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