TradFi’s Future: Embracing the DeFi Revolution

We recently conducted a survey involving 300 professionals from the normal finance (TradFi) sector across various institutions, roles, and regions. The consensus was strikingly clear: the present economic system is riddled with inefficiencies that hinder economic growth and deplete resources. The consequences of ignoring these issues are significant, however the potential losses from inaction are even greater. Many within the industry view decentralized finance (DeFi) as a game-changer—a technique to streamline processes and unlock real value. Our survey report argues that DeFi is not just another; it’s the long run that TradFi is poised to adopt, starting with policies that foster its development.

To delve deeper, access the total report here.

Exploring DeFi: A Major Focus for TradFi

TradFi’s current technological infrastructure demands extensive manual effort and is way from efficient. Consequently, many firms are venturing into recent territories, in search of technological solutions to scale back costs, enhance risk management, and improve operational efficiency. Cryptocurrency is now becoming an integral a part of their strategic plans:

• DeFi is perceived as a treatment for operational inefficiencies by TradFi firms.
• Nearly 90% are actively investing in or exploring public blockchain technologies.

TradFi is embracing its own disruption, recognizing the substantial advantages of transitioning to DeFi-enabled systems.

DeFi: An Inevitable Central Element for TradFi

The data is unequivocal: TradFi firms imagine DeFi will turn into critically necessary to their core operations. This belief is rooted within the expectation that DeFi will deliver tangible improvements to the financial ecosystem.

We’ve come a great distance from the times when DeFi was dismissed as irrelevant beyond the crypto sphere. Now, TradFi not only sees DeFi as inevitable but as a major opportunity.

Public Blockchains: The Preferred Choice Over Private Ones

Last 12 months, we highlighted a trend of central banks moving away from proprietary blockchains towards open-source and public networks. Our current survey reinforces this shift, with nearly all of the TradFi community valuing public, permissionless blockchains for his or her potential to harness smart contracts and tokenization.

It’s crucial to guard these systems and ensure robust incentives exist for developing and maintaining open, public infrastructure.

TradFi’s Top Picks: Stablecoins, Tokenized Assets, and DEXs

TradFi’s growing interest in stablecoins, tokenized assets, and decentralized exchanges (DEXs) aligns with rising on-chain volumes in these areas.

These three components are essential for accelerating market growth: a stable asset for settlement, a flexible means to represent various assets, and adaptable protocols for conducting on-chain financial transactions.

We anticipate continued upward trends in these areas over the approaching years.

Regulation: The Biggest Barrier to DeFi’s Potential

TradFi recognizes DeFi as inevitable and an improvement over many current systems, sharing the crypto community’s perspective on the importance of preserving open systems. The predominant hurdle is not the necessity for higher infrastructure or utility but moderately regulatory barriers that prevent TradFi firms from fully accessing DeFi.

The era of cautious statement is over. Four years past the DeFi summer, we have witnessed quite a few global and crypto market events which have highlighted DeFi’s resilience. It’s time for regulators to remove the obstacles separating TradFi from DeFi and permit firms to explore the potential of this transformative technology.

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