For more than a decade, while institutions, governments, and fintech giants have pursued scale, control, and revenue monopolisation, DeFi projects have championed open-source innovation and community-driven models. At its core, this has always been a competition for the same prize: customers. However, while people are taking sides, the future is not about one camp defeating the other; it’s about the emergence of a new financial order. The next generation of winners will be those who can create hybrid solutions, combining the trust, distribution, and regulatory strength of TradFi with the speed, transparency, and innovation of DeFi.

You can already see the blend evolving. The total value locked (TVL) in DeFi lending protocols has surged over 72% year-to-date in 2025, from $53 billion to more than $127 billion, largely fueled by institutional interest in tokenized real-world assets (RWAs). This explosive growth is a clear signal that Wall Street is no longer just observing the crypto space—it is actively integrating its core primitives. In addition, each side is now attempting to sell its fundamental infrastructure to the other, creating a unique and complex dance of mutual reliance.

Stablecoins are a clear example of this dynamic. Crypto native companies are trying to make themselves institutionally friendly. For instance, stablecoin issuer Circle, whose USDC stablecoin now boasts a market capitalization exceeding $65 billion, has launched its own proprietary Layer-1 blockchain, Arc, with USDC as the native gas token. This strategic decision provides a predictable, dollar-denominated fee structure and a platform tailored for enterprise-grade applications. Similarly, financial technology giant Stripe, in a collaboration with crypto venture firm Paradigm, has unveiled its payments-focused blockchain, Tempo, a direct challenge to the traditional payment network playbooks of Visa and Mastercard. These initiatives are not merely scaling solutions; they represent a vertical integration strategy aimed at owning the entire transaction stack, a clear adaptation of a centralized model but with on-chain efficiency.

While DeFi companies are trying to look more TradFi, legacy institutions are heading in the other direction. JPMorgan, the largest bank in the United States, for example, has moved beyond its private blockchain for internal settlements with JPM Coin and is now piloting a deposit token, JPMD, on the public Base network. This move, which is now supported by the new legal framework of the GENIUS Act, signals a profound shift. The bank seeks to leverage a public chain for institutional transactions while maintaining its regulated, private-network control over its internal, regulated system Liink, which already handles over $1.5 trillion in transaction volume. For traditional firms, the direct impact is a new revenue opportunity via on-chain services. However, going halfway puts institutions at a disadvantage when it comes to utilizing faster, more capital-efficient products offered by DeFi-focused agile fintechs, such as flash loans.

The hybrid approach is materializing into products that leverage both systems, going beyond a simple network and token launch. A prime example is the recent launch of Aave Labs’ Horizon platform, which enables institutions to use tokenized real-world assets, such as U.S. Treasuries, as collateral for stablecoin loans. It unlocks liquidity for previously illiquid assets and demonstrates a clear path for traditional finance to engage with the open-source infrastructure of crypto.

Another prominent example of this hybrid approach is the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). As the world’s largest asset manager, BlackRock has created a fund that invests in traditional financial instruments like U.S. Treasury bills and cash but is tokenized on the public Ethereum blockchain. This strategic move provides qualified, institutional investors with a regulated, yield-bearing security that can be transferred peer-to-peer on-chain, unlocking the liquidity and 24/7 operational efficiency of decentralized ledgers for a previously illiquid asset class. This product directly bridges the gap between the established, multi-trillion-dollar TradFi markets and the open, programmable infrastructure of crypto, representing a profound shift in how legacy firms are not just observing but actively participating in the new financial order.

The path forward will not be an unmitigated triumph for either side but a strategic blend of their strengths. Traditional finance will adopt the speed and transparency of decentralized ledgers while leveraging its long-held advantages in trust and regulation. Meanwhile, DeFi protocols must mature, build robust compliance layers, and design user-friendly solutions that appeal to the masses. The question is not if a hybrid model will emerge, but who will bring it to market first. Will it be a global financial giant, slow-moving yet armed with an ironclad balance sheet and regulatory access? Or will it be a fast-moving, agile startup, ready to build and deploy entirely new models that promise high returns with manageable risk? The race is on, and the victor will not just capture market share—they will define the rules of the next financial era.

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About the author:

Artem Gordadze, MBA, is a seasoned professional with over a decade of experience in product, business development, and capital markets, specializing in fintech, blockchain, and gaming. He has a proven track record of developing innovative products, executing go-to-market strategies, and driving significant growth. His work has contributed to the success of multiple unicorn companies, including Axelar Network, NEAR, Flowdesk, and Unstoppable Domains. He also played a key role in the success of Immutable, which achieved a valuation of over $3 billion. Artem has extensive experience collaborating with major cryptocurrency exchanges and trading firms on token launches and market-making, providing institutional-grade services.

X: https://x.com/ArtemGordadze

LinkedIn: https://www.linkedin.com/in/artem-gordadze-blockchain/

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