The promise of a decentralized internet (Web3) built on data sovereignty has not materialized. The fundamental reason is that the general population does not value privacy and data ownership enough to abandon convenient, centralized Web2 services, thus preventing Web3 from reaching critical mass.

Institutions define "institutional-grade" as having human safety nets, negotiating leverage, and someone to call. This directly contradicts the core crypto ethos of removing human intermediaries and soft power, creating an ironic tension for crypto protocols seeking institutional adoption.

Blockchain's disruption will not impact all of finance equally. Trading firms are safe because market making is a fundamental need. However, intermediaries like banks, exchanges, and custodians face an existential threat as their core function—managing ledgers and access—is directly replaced by blockchain's "private key and a ledger" infrastructure.

Crypto was unique for allowing retail investors access before Wall Street. Now, the market is dominated by venture capitalists who launch tokens at inflated valuations with long unlocking schedules, effectively using retail buyers as exit liquidity.

Unlike other tech verticals, fintech platforms cannot claim neutrality and abdicate responsibility for risk. Providing robust consumer protections, like the chargeback process for credit cards, is essential for building the user trust required for mass adoption. Without that trust, there is no incentive for consumers to use the product.

Traditional prime brokerage works because it can cross-margin diverse assets that don't all crash simultaneously. Crypto markets lack this feature, as assets show extreme correlation during crises, moving spectacularly in unison. This makes traditional risk models ineffective and derivatives inherently riskier.

Traditional finance is stabilized by diverse capital pools with varying time horizons, like pension funds. DeFi lacks these long-duration "savers," creating a market where borrowers and lenders operate on hyper-short time frames, causing yields to spike and collapse with extreme volatility.

Recent breakdowns in student loan processing, AI governance, and cloud infrastructure highlight the vulnerability of centralized systems. This pattern underscores a key personal finance strategy: mitigate risk by decentralizing your money, data, and income streams across various platforms and sources.

The success of protocols like Hyperliquid proves product-market fit for on-chain derivatives. This attracts new competitors who use zero-fee models and airdrops to steal market share, forcing a race to the bottom on fees until only one dominant player remains and can re-introduce them.