The Devoured Middle Ground: Will Web3's Endgame Become Just Another Wall Street Table?
The article "The Devoured Middle Ground: Will Web3 End Up as Just Another Wall Street Table?" argues that the initial revolutionary vision of Web3—decentralizing finance and replacing traditional systems like Nasdaq with blockchain—is being overtaken by traditional finance (TradFi). A pivotal moment occurred on November 10, 2023, when CME's Bitcoin futures open interest surpassed Binance's, signaling a shift in liquidity and influence.
The core issue is asymmetric "compliance cost": TradFi institutions (e.g., CME, BlackRock) can easily enter crypto by listing Bitcoin derivatives with minimal marginal cost, leveraging existing infrastructure, licenses, and regulatory relationships. In contrast, crypto-native firms face insurmountable barriers when attempting to tokenize traditional assets like stocks, due to prohibitive regulatory requirements, securities laws, and compliance risks—exemplified by FTX's failure.
The approval of Bitcoin ETFs in 2024 accelerated this trend, enabling large institutional players (pension funds, hedge funds) to gain exposure without direct crypto custody concerns. Liquidity and pricing power are shifting from offshore, less-regulated exchanges to compliant TradFi venues. Crypto is being stripped of its ideological attributes and reduced to a pure, volatile financial asset within traditional portfolios.
The conclusion is that Web3's financial layer, especially secondary trading, will likely be absorbed into TradFi, with blockchain remaining primarily for asset generation and settlement. The real alpha will follow liquidity, which is flowing back to Wall Street.
marsbit01/09 03:07
