KYB/AML friction and spread variations across institutional DeFi platforms
Been looking at a few different institutional-grade platforms for DeFi yield strategies lately, specifically those catering to larger allocations. It's interesting how varied the KYB/AML processes are. Some are surprisingly efficient, almost frictionless once initial documentation is in, while others seem to have endlessly layered requirements that feel more akin to traditional banking for a multi-million dollar loan than accessing a lending protocol. It makes me wonder about the underlying legal and compliance frameworks they're each navigating, and whether there's a standardized approach emerging or if it's still very much fragmented.
Beyond that, I've noticed significant variations in effective spreads and fees when moving between fiat and stablecoins, or even between different stablecoin pairs on these platforms. It's not always obvious from the headline fees; sometimes the execution slippage or underlying liquidity provision effectively widens the bid-ask more than advertised. Anyone else finding themselves doing a deep dive on effective cost per transaction rather than just looking at published rates? It's a key factor when scaling strategies.
The KYB/AML is definitely a pain point, but I've found it often correlates with how established or regulated the platform wants to appear. The real issue is when that friction doesn't translate into better spreads or more secure access to liquidity.