The following is an Opinion Piece written by “Sky”, the founder of “LIKWID“, a platform for permissionless margin trading and lending for any token. The opinions in this article do not necessarily reflect those of Global Crypto (PTY) Ltd.
Decentralized finance (DeFi) has a tendency to call itself permissionless, and this is heard in both professional and casual settings, but that isn’t the case at all. The framing and narrative fall apart the second transparency reveals who actually gets access to leverage, margin, and serious capital.
The same cluster of blue-chip assets dominates every key global money market as the ever-extending tail of tokens is left to fend for itself with shallow liquidity and no access to the right tooling. This is not permissionless, and it certainly isn’t ‘open finance’.
Protocols say they can’t justify margin or leverage for smaller assets since the risk engines aren’t there or liquidity is too fragmented, but the reality is very different. Most systems have their risk logic, margin mechanics, and collateral models hardwired around a few large assets.
Long story short, everything else gets treated as an afterthought, and since DeFi wants to be serious about being more than a leverage casino, it must step up. The long tail is where experimental governance, new communities, and new token economic ideas come to life.
Composable hooks help realize those, turning margin from a privilege reserved for big tokens into a standard function that any token can plug straight into. The days of DeFi staying small and irrelevant to anyone outside of crypto can finally be put behind us.
The Long-Tail Problem is Self-Inflicted
Total Value Locked (TVL) and volume data show that the long-tail problem is indeed self-inflicted, as the data remains overwhelmingly concentrated in a small basket of assets across decentralized exchanges (DEXs) and money markets.
Meanwhile, thousands of tokens sit on the sidelines. They’re tradeable, but structurally, they’re underpowered. The power to evolve is there, with DeFi on the same trajectory as fintech and SaaS growth patterns, but most DeFi protocols refuse to apply this insight to margin.
The result is the same as expected: liquidity accumulating precisely where it would be when protocols only support margin for assets hard-coded years ago. Even lending markets are significantly concentrated around a tiny fraction of major assets, as long-tail collateral gets left behind and systemically underutilized.
If DeFi is genuinely seeking breadth, it has to remove margin from the traditional constraints of being a protocol-only feature. It has to become a composable primitive that anyone anywhere can attach to any token (subject to transparent, auditable limitations of course).
Hooks Make Margin into a Public Good
Composable hooks hold weight in a space that suffers from the long-tail problem because they convert margin from feature to infrastructure. A margin hook can encapsulate risk modeling, collateral factors, liquidation rules, and oracle selection into a module that any token or pool can attach.
These capabilities eliminate the need for assets to plead for whitelisting from key protocols or waiting years for ‘bespoke’ integration. It also mirrors how more mature financial money markets function, where margin processes become standardized frameworks applied across instrument classes.
With composable hooks, DeFi can now match the standards of traditional finance (TradFi) rather than being stuck forever in a cycle of one-off integrations. So, when the rest of the industry recognizes the power of modular logic, why doesn’t DeFi?
Look at Uniswap’s v4 hook architecture, which formalizes a framework that enables custom behaviors to be attached at the pool level, such as oracle configurations, compliance modules, and more. To lend credibility to this framework, it’s publicly outlined in its technical submission to the United States’ Securities and Exchange Commission (SEC).
When the margin becomes modular, it becomes a public good. In the modular environment, any token can attach a verified, audited margin hook and immediately benefit from the same access to the same category of financial utilities the major assets receive.
The Choice Ahead
All that’s left now is for DeFi to make the decision to become genuinely permissionless and enable every token to adopt a financial primitive that makes markets function, or it just continues operations under the pretence of ‘openness’.
In this market, there is no meaningful middle position. The risks associated with long-tail leverage aren’t a justification for continued exclusion; with the right engineering, they can be mitigated and eliminated.
Transparent, parameterized margin hooks, formal audit standards, collateral tiers, and constrained leverage ranges solve all the issues faced without ever sacrificing inclusion. Ignoring composable margin is a choice to keep DeFi small; it isn’t just mere ignorance anymore when the industry knows better is available.
DeFi must choose growth through modularity or to submit to a model already proven too narrow to realize its ambitions. The long-tail is ready. Now the only question remaining is when the architecture will catch up.
