Combining the Best of Both Worlds

The integration of blockchain technology, particularly smart contracts, with traditional asset markets like Exchange-Traded Funds (ETFs) offers a powerful combination of benefits to investors. Blockchain provides features like 24/7 trading, transparency, and security that traditional financial systems struggle to match. Smart contracts, which automate transactions and contract execution, further enhance this ecosystem by enabling features such as auto-reinvesting dividends without the need for intermediaries, thus reducing costs that would otherwise go to fund managers or brokers. This can significantly cut down on the typical fees associated with actively managed funds, which average between 0.66% to 1% annually​ (Schwab).

Self-custody is another critical advantage of using blockchain-based assets. With self-custody, investors maintain direct control over their assets, eliminating the risk of losses due to third-party mismanagement or fraudulent activities. The transparency and security of blockchain, combined with its ability to prevent double-spending, ensures that your investments are safe from tampering​ (Finance Strategists)​ (101 Blockchains).

On the traditional side, ETFs offer a highly accessible entry point into diversified portfolios, with lower transaction costs compared to purchasing individual stocks. For instance, trading ETFs often comes with reduced costs—some platforms offer commission-free trades, and the typical bid-ask spreads are often narrower, saving investors up to 0.25% per trade​ (Schwab).

Additional benefits of this fusion include increased liquidity, as blockchain technology enables fractional ownership, allowing investors to buy and sell smaller portions of ETFs, making it easier to diversify even with limited capital. Moreover, blockchain can support the creation of decentralized ETFs, where smart contracts manage a basket of assets automatically, reducing the need for human intervention and further lowering costs​ (101 Blockchains).

Lastly, the immutability and transparency of blockchain records can improve trust in the financial system. Investors have real-time access to transaction histories and can verify the legitimacy of trades, reducing the likelihood of market manipulation and fraud​ (Finance Strategists).

By merging these worlds, investors can leverage the automation, security, and transparency of blockchain while still enjoying the diversification and cost-efficiency of ETFs. This synergy provides a compelling, user-friendly investment experience that brings together the best aspects of both modern and traditional finance.

Feature	TradFi Broker	Smart Contract DeFi	Nex Protocol
Trading Hours, global availability	9:00 to 17:00, per country	24/7 trading, globally available, often limited per chain	24/7, Uniswap liquidity during off-market hours, market hours mint/burn + off-market limit order placement. Crosschain availability due to CCIP integration
Transparency	Relies on intermediaries, frontrunning based on latency to exchange	Full transparency, all transactions on blockchain	SC + dashboard wallet trading history + theGraph analysis tools
Custody of assets	Held by third parties	Crypto wallets are self-custody	Self-custody for crypto, RWA's focus on providers with separate legal entities
Fees	Various: Annual fees, broker fees, asset management fees, orderbook viewing fees, etc.	Lower/more transparent fees: Liquidity pool trading with 0.1-0.3%	Reduction due to SC automation.
Asset access	Easy access to tradfi assets	DeFi products	Focus on emergent RWA's in DeFi + Crypto assets + Yield bearing stables
Automation	Limited, manual process for reinvestment	High automation, turing complete	Advanced orders such as grid trading and automatic asset reinvestment strategies
Security	Dependent on institutions, partially backed	High security, cryptographic protection, double spending protection	Enhanced security with blockchain and self-custody mechanisms
Investment Options	Wide range of traditional assets	Crypto assets and RWA's	Focus on emergent RWA's
Fractional ownership	Limited to certain assets and/or platforms	Down to fractions of cents	Easily available due to smart contract
Regulatory environment	Established regulations, investor protection	Limited/emerging protection, legal uncertainties	Aiming for MiCa(r) compliance, RWA's require KYC
Leverage and liquidity	Access to leverage through margin account, often high (hidden) fee services	Many DeFi platform offer various services	Integration with Defi services to offer advanced trading features. 3rd Parties can instal Nexlabs widget through npm package.
Capital Insurance	Government-backed insurance, EU 100K for savings but not for broker account.	Generally no insurance, although emergent 3rd opt-in services	Nexlabs aims to use RWA providers who protect user asset through segregation in separate legal entities and use 100%+ asset backing.
Simplicity	Not mobile friendly, requires banking/trading affinity	Various mobile integrations, Telegram, Discord and Twitter are crypto favorites	Users can create a crypto wallet using a social media account, cryptographic logic is abstracted away, aiming for single click trading on mobile.