Svmuu News: a16z Crypto released an analysis stating that traditional finance (TradFi) is not merging with decentralized finance (DeFi), but rather selectively adopting blockchain technology that meets its own needs. A long-standing narrative in the crypto industry holds that DeFi and TradFi will eventually merge, combining open liquidity with institutional distribution to form a new system superior to traditional finance. However, the reality may be different.
The core driver behind traditional finance’s adoption of blockchain is not the concept of decentralization, but rather business efficiency. As long as blockchain can help institutions reduce costs, improve settlement efficiency, expand distribution channels, and strengthen customer relationships, they will adopt the relevant technology. “TradFi is not entering DeFi; rather, it is leveraging the aspects of DeFi that fit its own operational model and reshaping these technologies to meet institutional requirements.”
a16z Crypto suggests that a new category of financial infrastructure may emerge in the future—“programmable financial infrastructure”—which is built on blockchain but optimized for institutional constraints. The blockchain technologies currently being adopted by institutions primarily include:
Atomic Settlement: Reduces counterparty risk and decreases collateral tied up;
Shared Ledgers: Reduces back-office reconciliation costs;
Programmable Money: Enables the automated execution of interest payments, margin management, and corporate actions;
Automated Market Makers (AMMs): Reapplied to on-chain foreign exchange and tokenized asset pricing.