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Paradigm DeFi Research Report: Over Two-Thirds of Traditional Financial Firms Are Paying Attention to DeFi

 

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Written by: Paradigm Policy Team

Translated by: TechFlow

We surveyed 300 traditional finance (TradFi) professionals across various institutions, positions, and regions. The results were nearly unanimous: the current financial system is hindered by inefficiencies, which stifle economic growth and lead to resource waste. The urgency of these issues makes the cost of inaction even higher. Many see decentralized finance (DeFi) as a solution—a way to eliminate redundancies and unlock real value. Our report makes it clear: DeFi is not just an alternative; it is the future of traditional finance, and it all begins with policies that support its development.

Click here to access the full report.

Finding 1: More than Two-Thirds of Traditional Finance Firms Are Paying Attention to DeFi

The existing technological infrastructure and systems used by traditional finance are labor-intensive and require a significant amount of manual processing. As a result, many TradFi firms are exploring cutting-edge technologies to reduce costs, improve risk management, and enhance operational efficiency. Crypto technology is increasingly becoming a part of their strategy:

  • TradFi firms view DeFi as key to addressing operational inefficiencies.
  • Nearly 90% of firms are investing in or researching how to leverage the benefits of public blockchains.

Traditional finance is actively embracing self-disruption because they recognize the immense benefits of transitioning to DeFi-driven infrastructure.

Finding 2: DeFi Will Become a Core Component of Traditional Finance Businesses

The data clearly shows that TradFi believes DeFi will eventually play a crucial role in their core products and business lines. This perspective is driven by the belief that DeFi can enhance the financial system.

TradFi has shifted from initial skepticism to widespread acceptance, no longer viewing DeFi as confined to the crypto space but rather as an inevitable trend and a major opportunity.

Finding 3: Traditional Finance Rejects Private Blockchains as a Substitute for Public Permissionless Blockchains

Last year, our research showed that central banks were gradually abandoning proprietary blockchains in favor of open-source software and public networks. This latest survey further confirms that most of the TradFi community sees public, permissionless blockchains as essential for applications like smart contracts and asset tokenization.

Therefore, protecting these systems and establishing strong incentives for the development and maintenance of open, public infrastructure is crucial.

Finding 4: Stablecoins, Asset Tokenization, and Decentralized Exchanges (DEXs) Are Key Focus Areas for TradFi

Stablecoins, asset tokenization, and decentralized exchanges are currently the areas of greatest interest to TradFi, aligning with the growing on-chain transaction volumes in these sectors.

These three pillars are essential for accelerating market growth because they provide:

  • Settlement assets
  • A universal representation of assets
  • Composable protocols for on-chain financial transactions

In the coming years, we expect continued rapid growth in these areas.

Finding 5: Regulatory Barriers Are the Biggest Short-Term Obstacle to Unlocking DeFi’s Economic Efficiency—Policymakers Face a Generational Opportunity for Change

Traditional finance (TradFi) has come to recognize that the rise of decentralized finance (DeFi) is inevitable and that it represents a significant improvement over many existing financial systems. On this point, TradFi and the crypto industry share a common understanding—the latter has long fought to protect the open nature of DeFi to ensure this innovation is not stifled before it reaches full maturity. However, the primary obstacle preventing TradFi from fully embracing crypto is not a lack of infrastructure or usability but rather restrictions imposed by banks and market regulators. These regulatory bodies have effectively blocked financial institutions, banks, exchanges, and funds from entering the DeFi space, slowing the pace of integration.

The era of cautious observation is over. It has been four years since the "DeFi Summer," and we have witnessed a series of global market events and crypto market upheavals that have demonstrated DeFi’s anti-fragility. Now is the time for regulators to open the gates between traditional finance and DeFi, allowing financial institutions to embrace this revolutionary technology.

 

This article is sourced from Foresight News:

https://foresightnews.pro/article/detail/80916

Respectfully submitted by the AIC Team

March31, 2025