For centuries, banks and financial institutions have controlled the flow of money globally...
But suddenly, a new decentralized entity emerged, without branches, without managers, and without traditional licensing:
Decentralized Finance – DeFi
So is DeFi just a temporary phenomenon?
Or is it really a serious competitor threatening the throne of traditional finance (TradFi)?
The basic comparison:
Element Traditional Finance (TradFi) Decentralized Finance (DeFi)
Control Centralized – under the authority of the bank or state Decentralized – via smart contracts and community
Transparency Limited Full – Everything on the blockchain
Hours Works only during business days 24/7 – No interruptions
Access Requires paperwork, a bank account, ID Open to everyone with just a wallet
Fees Variable + sometimes hidden Clear, and may be lower
Successful use cases in DeFi:
1. Aave – Decentralized Lending Platform:
You lend and borrow your assets without the need for a bank.
Interest determined by the market, not the central bank.
2. Uniswap – Decentralized Trading Protocol:
Without intermediaries.
Liquidity is provided by the community.
Lower fees, and complete transparency.
3. Curve – Stablecoin Exchange:
Specialized in converting stablecoins efficiently and at low fees.
But... not everything is rosy:
Despite the advantages, DeFi faces serious challenges:
Security breaches:
Exploiting vulnerabilities in smart contracts (like the Wormhole and Ronin incidents).
Billions in losses in some cases.
The complex experience:
The average user finds it difficult to understand wallets, fees, signing, and more.
Reliance on Oracles and sidechains:
Any glitch in the data source = glitch in the smart contract.
So... who is stronger now?
TradFi possesses the legal framework and institutional support, but it is slow and centralized.
DeFi is fast, open, and innovative… but it needs more protection and simplification.
The battle is still ongoing.
But one thing is for sure: finance is changing and the future won't remain traditional.
Discussion Question:
Have you used DeFi before?
If you have used it: What was your experience with Aave or Uniswap?
And if you haven't used it: What’s holding you back? Security? Complexity? Or is there no actual need?
