> functionally a wealth transfer from grandma to an institutional trader

This makes no sense. Grandma can only lose money if she sells, most are not actively trading in the market.

Also large trades are in both directions. Some are trying to unload large holdings and some are trying to build large holdings. These pools are merely trying to find other large transactions to be the counterparty, the net effect is to reduce volatility in the open market, which is the whole point: price stability for their transaction.