Crypto's Most Abundant Resource Is Going to Waste

Here is an incongruity that has puzzled us since we first dove into the dizzying world of cryptocurrencies: crypto is arguably the most volatile asset category in modern financial history, yet it has some of the least developed infrastructure to harness that volatility. In price terms, Bitcoin is up roughly 387% over the last three years, 173% over the last five, and about 20,500% over the last ten; over the same periods, the S&P 500 is up roughly 79%, 82%, and 262%. And yet, Bitcoin has also spent roughly three quarters of its trading history at least 20% below its prior peak. For many traders, this volatility is precisely what drew them to crypto—the source of 100x+ returns, the engine of wealth creation that traditional markets cannot match. Yet we have built almost nothing that allows participants to deliberately choose their relationship with this volatility—to harness it, to tame it, to exploit it. Imagine living in a country with abundant rainfall, yet no reservoirs, canals, or dams—where floods alternate with droughts. Crypto today looks similar.

It’s not that crypto lacks derivative instruments–quite the contrary. Trading in perpetual futures hit a record $85.7 trillion in 2025 across the top ten centralised exchanges. But the issue is that perpetual futures are blunt tools: primarily used for directional speculation with leverage, not for sophisticated risk strategies. They do not allow users to shape risk—only to magnify it. Perpetual futures allow traders to bet on price direction with leverage, but they do not allow investors to dial risk up or down without risking forced liquidation.

Traditional Finance (“TradFi”) has over $4 trillion in risk products ranging from risk parity funds, tail risk products, structured notes, option overlays, volatility derivatives, buffer funds, etc. These are not merely defensive instruments—they are tools for expressing specific views on risk, trading it, generating income, and profiting from volatility regardless of market direction. In crypto, where arguably the need for such risk solutions is greater, comparable products are virtually non-existent. 

The cost of this missing infrastructure is not merely the losses that could have been avoided. It is equally about gains that went uncaptured, strategies that could not be executed, and opportunities that slipped by because the tools did not exist.

Crypto's most abundant resource—risk itself—is going to waste and remains unharvested. If risk is abundant in crypto, why not make it tradable?

The Sovereignty Paradox

When markets turn brutal, most crypto investors flee into stablecoins. We have watched this pattern repeat across cycles. Portfolios rotate entirely into USDC or USDT the moment fear sets in. This is not risk management—it is capitulation. Moving to stablecoins forfeits all upside, ties a decentralised ecosystem back to fiat stability, and yields no return during the waiting period—unlike strategies that could profit from elevated volatility or generate yield from risk premiums. Moreover, this reliance on USD-pegged assets runs counter to the ethos of crypto's decentralization and financial sovereignty.

The binary choice between full exposure and full exit reflects infrastructure failure. Investors in TradFi can reduce risk exposure while remaining invested. They can generate income from volatility and trade it. The fact that crypto participants cannot do so represents a multi-billion-dollar gap and a massive infrastructure opportunity.

Why Institutions Remain on the Sidelines

Large traditional institutions are not avoiding crypto because they do not understand it. A fund manager might personally believe in Bitcoin or the promise of DeFi, but if they cannot fit that investment into a risk-controlled framework, it becomes a non-starter. A 50% drawdown is not just a paper loss for an institution—it could be a career-ending event, a breach of fiduciary duty, or a compliance violation. Asset managers have volatility targets, drawdown limits, and income requirements. If they can only access crypto through raw spot exposure or liquidation-prone leverage, it becomes a no-go territory. They need instruments that let them participate on their terms.

The 2024 Bitcoin ETFs demonstrated institutional appetite—BlackRock's IBIT ranked sixth in ETF inflows in 2025 despite Bitcoin's price declining. But those ETFs solved the access problem, not the strategy problem. Institutions still lack tools to amplify when conviction is high, protect when mandates require it, generate income from volatility, or express nuanced views on specific risks.

RiskFi: The Missing Layer in Crypto’s Financial Stack

Crypto has spawned innovative new financial markets over the last decade. It has given rise to massive spot & derivatives markets, lending platforms, payment rails, stablecoins, digital art (NFT), and entire global parallel capital markets that operate 24/7, with no t+3 settlement, and without centralized intermediaries. What crypto has not yet built—at least not explicitly—is a coherent market for risk itself.

RiskFi is our term for that missing layer. RiskFi represents the emergence of risk as a first-class, on-chain asset and market primitive—one that can be isolated, parameterized, priced, transferred, and composed, rather than remaining embedded within opaque instruments or contractual wrappers, or remaining vulnerable to specific counterparties. In RiskFi, volatility, drawdowns, tail risk, regime shifts, funding stress, and uncertainty are no longer merely side effects of financial activity; they become the object of financial activity.

Instead of treating volatility as an undesirable attribute to bear with or avoid, it is tokenized. Imagine splitting any cryptocurrency into “risk flavors”. One risk flavor for stability-seekers: reduced volatility, cushioned drawdowns, capped but real participation. Another risk flavor for conviction-holders: amplified exposure, enhanced upside capture, higher beta. Both sides represent legitimate demand. The stability-seeker and conviction-holder become natural counterparties in a liquid marketplace—no borrowed funds, no margin calls, no liquidations.

Risk can be tokenized. It can be indexed. It can be priced dynamically. It can be settled quickly, cheaply, and deterministically. For the first time, risk becomes legible.  This level of financial transparency is not an incremental improvement but a financial breakthrough. 

The Path Forward

Crypto's path to the next trillion dollars requires infrastructure that lets participants own their relationship with risk. Not just to hedge it, but to harness it. Not just to survive it, but to profit from it. The opportunity is immense: risk is not something to fear in crypto—it is crypto's most abundant untapped resource.

By transforming risk from a characteristic to endure into an asset to trade, we unlock value that is currently unharvested. The participant who wants amplified exposure gets it. The participant who wants stability gets it. The participant seeking to profit from volatility, regardless of direction, gets it. The participant who wants to bet on other specific risks also gets it. Everyone gets a choice. This represents a fundamental shift: from risk imposed upon participants to risk selected by them.

RiskFi is early and cutting-edge. Its boundaries are not fixed. Its taxonomy is still evolving. But its first principle is already clear: Risk should be explicit, programmable, transferable—and native to the decentralized financial system.