The outcome of merging traditional finance and decentralised finance.

[Ticdeneb]

What potential outcomes and difficulties could arise from merging traditional and decentralized finance  using public blockchain technology as the underlying infrastructure?
 
Here are some of the possible implications or outcome when traditional finance and decentralised finance are merged together.

1. Financial Inclusion: It can provide access to financial services for the unbanked and underbanked.
2. Efficiency and Transparency: Blockchain enables faster transactions and reduces fraud through transparent records.
3. Regulatory Challenges: Balancing decentralized finance with existing regulations requires collaboration between stakeholders and regulators.
4. Scalability and Performance: Addressing limitations in public blockchains is necessary to handle increased transaction volume.
5. Security and Privacy: Robust security measures are needed to protect funds and data while finding a balance between transparency and privacy.
6. Interoperability and Standardization: Common standards are required for seamless integration across different platforms and systems.
7. Education and Adoption: Educating users, institutions, and regulators is crucial for successful implementation.

The above mentioned are some of the possible outcomes I could think of but for this to be achieved, I believe that institutional grade products must be created and by institutional- grade, I mean products that are built with security and transparency as it's major principle and not limited to being regulatory compliant.  Are there any projects currently championing this cause?

[jrrsparkles]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

[Ticdeneb]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

The reason I brought up the need for platforms with strong security and transparency is because of the "security concerns." If we want this merger to be successful, developers should focus on developing platforms that meet these criteria. Have you heard of ONDO? I'm still observing it, but It's one platform that could potentially fulfill these requirements, and if it lives up to expectations, it could be the key to achieving a seamless integration of traditional finance (trad-fi) and decentralized finance (defi).

[jrrsparkles]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

The reason I brought up the need for platforms with strong security and transparency is because of the "security concerns." If we want this merger to be successful, developers should focus on developing platforms that meet these criteria. Have you heard of ONDO? I'm still observing it, but It's one platform that could potentially fulfill these requirements, and if it lives up to expectations, it could be the key to achieving a seamless integration of traditional finance (trad-fi) and decentralized finance (defi).

I am not following much of the new projects lately, but I will take a look into the project you mentioned and see what's new in it from the existing projects.

The problem with traditional finance is, profit driven business but defi is completely community driven model so merging both can be a hell lot of a job and with highest security possible it gets more difficult.

[Iamcrypticguy]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

The reason I brought up the need for platforms with strong security and transparency is because of the "security concerns." If we want this merger to be successful, developers should focus on developing platforms that meet these criteria. Have you heard of ONDO? I'm still observing it, but It's one platform that could potentially fulfill these requirements, and if it lives up to expectations, it could be the key to achieving a seamless integration of traditional finance (trad-fi) and decentralized finance (defi).

I am not following much of the new projects lately, but I will take a look into the project you mentioned and see what's new in it from the existing projects.

The problem with traditional finance is, profit driven business but defi is completely community driven model so merging both can be a hell lot of a job and with highest security possible it gets more difficult.

You should DYOR ONDO; it has it all – real-world assets, tradefi, DeFi, DAO, etc. It made news yesterday after being introduced on exchanges like Bitget. Personally, I'll be dollar-cost averaging into this for the long term because I believe in the project, and they've got top-notch backing from Coinbase, etc.

[Abiky]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

Why combine bring traditional finance into "De-Fi"? Isn't the whole purpose of crypto/Blockchain tech to eliminate the middleman? By doing such a move, we would be creating something called "CeDeFi" (Centralized/Decentralized Finance) which is a hybrid financial solution. I'd certainly wouldn't want to use something like that, especially when it'll abide with KYC/AML laws. More control/power for the government, and less freedom for the end user.

I think crypto is already starting to move away from its core principles. The vast majority of developers want to please the regulators and "Wall Street" just to avoid getting into trouble. Believe me, if Satoshi did that in the first place, Bitcoin would've been centralized already. I sure hope truly-decentralized projects stay true to their principles of freedom and privacy. As long as the community fights back, centralizing powers won't be able to stop the revolution. Just my thoughts

[cryptoaddictchie]

DeFi platforms have security concerns that is why you can see tons of defi platforms hacks in all these year from this thread: DeFi hacks [history]

Traditional finance institutions are the direct competitors for defi so I don't know how both can be merged.

Well its either you totally segregate it or completely merge it. People who want a safe haven do want it but some anonymous dont want to compromise since they dont feel it that being involved in bank might affect their agenda on decentralized space like being taxed iressponsibly due to massive profits on crypto or either this is the whole reason some dont want the mixture of it.

[Sophokles]

What potential outcomes and difficulties could arise from merging traditional and decentralized finance  using public blockchain technology as the underlying infrastructure?
 
Here are some of the possible implications or outcome when traditional finance and decentralised finance are merged together.

1. Financial Inclusion: It can provide access to financial services for the unbanked and underbanked.
2. Efficiency and Transparency: Blockchain enables faster transactions and reduces fraud through transparent records.
3. Regulatory Challenges: Balancing decentralized finance with existing regulations requires collaboration between stakeholders and regulators.
4. Scalability and Performance: Addressing limitations in public blockchains is necessary to handle increased transaction volume.
5. Security and Privacy: Robust security measures are needed to protect funds and data while finding a balance between transparency and privacy.
6. Interoperability and Standardization: Common standards are required for seamless integration across different platforms and systems.
7. Education and Adoption: Educating users, institutions, and regulators is crucial for successful implementation.

The above mentioned are some of the possible outcomes I could think of but for this to be achieved, I believe that institutional grade products must be created and by institutional- grade, I mean products that are built with security and transparency as it's major principle and not limited to being regulatory compliant.  Are there any projects currently championing this cause?

Using blockchain technology can give a business more transparency and trust as long as they can secure the smart contract that has been used in those dapps. It is not possible to run a decentralized financial system without a smart contract because the rules of decentralization is preset and cannot be altered by anyone. There is another concern about government regulation. The government probably won't allow decentralized finance due to the uncontrollable environment it will create for them.

[btc78]

Would not decentralized finance lose its core value by merging with traditional finance? Even though some people might be into this idea, i know for a fact that a lot of people would not feel comfortable participating with a supposedly decentralized finance but authorities have access to the system it might also just be too confusing to people decentralized finance is already confusing to others as it is but to merge centralized finance with it it begs the question of why not just make it entirely different or separate? Both has pros and cons but merging it would not attract more people, i believe

[jrrsparkles]

I think crypto is already starting to move away from its core principles. The vast majority of developers want to please the regulators and "Wall Street" just to avoid getting into trouble. Believe me, if Satoshi did that in the first place, Bitcoin would've been centralized already. I sure hope truly-decentralized projects stay true to their principles of freedom and privacy. As long as the community fights back, centralizing powers won't be able to stop the revolution. Just my thoughts

More or less, the crypto market is already controlled by the governments indirectly by heavy scrutinizing via centralized exchanges, linking identity via KYC documents, and imposing heavy taxes but at least the nature of cryptocurrency remains the same which is decentralized but with so called merging, combining we also let go of the decentralization as well which has no positive for the crypto's future.

[Abiky]

More or less, the crypto market is already controlled by the governments indirectly by heavy scrutinizing via centralized exchanges, linking identity via KYC documents, and imposing heavy taxes but at least the nature of cryptocurrency remains the same which is decentralized but with so called merging, combining we also let go of the decentralization as well which has no positive for the crypto's future.

Even though the crypto market is controlled by governments, they still haven't been able to control the Blockchains underpinning most cryptocurrencies. We can thank their decentralized and censorship-resistant design for that. But this would be put in vain if we bring centralized powers into the Blockchains themselves. Or at least, into smart contracts. By making hybrid financial apps (centralized + decentralized), we will also be giving governments the ability to inflitrate crypto at is core and destroy it.

Why the idea of merging traditional finance into "De-Fi"? Wasn't the whole point of crypto to eliminate the middleman? If developers do this, they will be making Web 3.0 no different than Web 2.0. Due to fear of being prosecuted by mainstream governments, it's most likely "De-Fi" will take the path of centralization in the long run. We could say "Wall Street" and banks have already won. It's a dark future for crypto/Blockchain tech. I'd bet Satoshi is extremely disappointed with crypto's current state. That's assuming he is still alive.

[Husires]

Decentralized finance needs to be regulated by the government to be effective. Therefore, although the restrictions related to it will not be as stringent as those of banks, it will be in the area of microfinance for the average and in the range of 10k USD, it can be integrated with central finance, but unfortunately, governments may not like the idea of being there. Greater freedom to circulate money, and therefore you may not agree to this financing, especially if the profits and control of the banks begin to decrease, but the integration between them may give better results for everyone looking for financing.

[slashz9]

Would not decentralized finance lose its core value by merging with traditional finance? Even though some people might be into this idea, i know for a fact that a lot of people would not feel comfortable participating with a supposedly decentralized finance but authorities have access to the system it might also just be too confusing to people decentralized finance is already confusing to others as it is but to merge centralized finance with it it begs the question of why not just make it entirely different or separate? Both has pros and cons but merging it would not attract more people, i believe

I think it will be difficult to combine because the basic concept is different, decentralization, namely freedom and not being tied to any party, but if there is something like that, and it is likely to be a better choice, then it will be accepted and implemented in society.

[Text]

The reason I brought up the need for platforms with strong security and transparency is because of the "security concerns." If we want this merger to be successful, developers should focus on developing platforms that meet these criteria. Have you heard of ONDO? I'm still observing it, but It's one platform that could potentially fulfill these requirements, and if it lives up to expectations, it could be the key to achieving a seamless integration of traditional finance (trad-fi) and decentralized finance (defi).

What ONDO stands for? I want to understand how it addresses the security concerns and transparency aspects to make the merger to be effective. Does it really have the potential role in achieving the integration?

What do you think are some other key factors to consider for a successful merger? Have you come across any other interesting projects besides ONDO that are tackling this challenge?

[Abiky]

Decentralized finance needs to be regulated by the government to be effective. Therefore, although the restrictions related to it will not be as stringent as those of banks, it will be in the area of microfinance for the average and in the range of 10k USD, it can be integrated with central finance, but unfortunately, governments may not like the idea of being there. Greater freedom to circulate money, and therefore you may not agree to this financing, especially if the profits and control of the banks begin to decrease, but the integration between them may give better results for everyone looking for financing.

Regulations were designed to protect investors at the expense of more government control/outreach over a particular asset class (in this case, crypto). "De-Fi" doesn't need to be regulated by the government, especially when it's not bound to a single jurisdiction. Crypto is the same, but the fact that it can be traded for other currencies, opens the door for governments to enforce regulations (especially on centralized exchanges).

"De-Fi" apps, on the other hand, don't have any Fiat on/off ramps. They only use crypto for everything from borrowing to lending and staking. Those that have a Fiat on/off ramp are not truly-decentralized. Why make matters worse by forcing developers to modify existing "De-Fi" platforms to abide with KYC/AML laws? If successful, we would have something called "CeDeFi". It will move crypto away from its original principles. Is that the future we want for the industry?   

[Promocodeudo]

OP, this idea will not scale through because decentralization is core value and purpose of crypto, so that no one will be full in charge or control of the system, so if the two monetary system is been merged, don't you think that purpose for the creation of crypto is being conquered, it will be better for system to function separately in other not to give room for government interference or control of crypto, let's continue to exchange our crypto to our traditional currency which is obtainable anything apart that is centralization which will not be a good part for crypto.

[Abiky]

OP, this idea will not scale through because decentralization is core value and purpose of crypto, so that no one will be full in charge or control of the system, so if the two monetary system is been merged, don't you think that purpose for the creation of crypto is being conquered, it will be better for system to function separately in other not to give room for government interference or control of crypto, let's continue to exchange our crypto to our traditional currency which is obtainable anything apart that is centralization which will not be a good part for crypto.

Funny thing is that existing "De-Fi" apps are embracing centralized stablecoins with open arms. I'm talking about USDC, USDT, and the likes. This is the first step towards the infiltration of the corrupt banking system into crypto/Blockchain tech. Developers may have opened the doors for governments to move away "De-Fi" from its true principles. If adding centralized stablecoins was nothing, imagine integrating KYC into "decentralized apps". It would be the end of an era for privacy and freedom.

People are only focusing on making money instead of what matters most. I guess it's too late, especially with "Wall Street" onboard. A dark future for Web 3.0 lies ahead. We should be ready for the worst.

[Hispo]

OP, this idea will not scale through because decentralization is core value and purpose of crypto, so that no one will be full in charge or control of the system, so if the two monetary system is been merged, don't you think that purpose for the creation of crypto is being conquered, it will be better for system to function separately in other not to give room for government interference or control of crypto, let's continue to exchange our crypto to our traditional currency which is obtainable anything apart that is centralization which will not be a good part for crypto.

That is a fair point. People on the internet immediately believe that Bitcoin and other crypto currencies being immediately included in traditional banks or tools in the United States or in the European Union is something good. But someone aware of the main objective of Bitcoin is (decentralization) would say that those adaptations of Bitcoin to the markets are rather efforts to centralized the use of Bitcoin, so people interested in Bitcoin and other major cryptocurrencies won't bother to have a non custodial wallet, and only keep their funds in those centralized instruments.
For example, there have been some banks which have announced to start to offer Bitcoin services to their clients with a high tolerante to volatility. Those potential clients would have had a decentralized wallet on their own eventually, if they were truly interested in Bitcoin. Now they have the apparent comfortability to have their BTC in the same bank account their FIAT is.
The apparent sense of legitimacy which is granted to Bitcoin by those centralized institutions comes at the cost of centralizing the holding of satoshis and the value of them, it is exactly the opposite on what the mission of Alts and BTC is, in my opinion.

[o48o]

Lot to unpack in here so starting from the first:

-cut-
1. Financial Inclusion: It can provide access to financial services for the unbanked and underbanked.

Sure, but this doesn't mean that people can use crypto to escape regulations or economic sanctions. It used to be the case but crypto tracking has become way more sophisticated now

What potential outcomes and difficulties could arise from merging traditional and decentralized finance  using public blockchain technology as the underlying infrastructure?
 
Here are some of the possible implications or outcome when traditional finance and decentralised finance are merged together.

2. Efficiency and Transparency: Blockchain enables faster transactions and reduces fraud through transparent records.
3. Regulatory Challenges: Balancing decentralized finance with existing regulations requires collaboration between stakeholders and regulators.
4. Scalability and Performance: Addressing limitations in public blockchains is necessary to handle increased transaction volume.
5. Security and Privacy: Robust security measures are needed to protect funds and data while finding a balance between transparency and privacy.

Transparency doesn't necessarily mean public blockchains like we see today. It's all about auditability. And stakeholders aren't having a vote here. It's about regulations. You can't have a stake in some company for example without complying with regulations. That's not collaboration, that's just following rules. Also there's no system ready for meaningful decentralized systems that would allow you to use tokens as company shares.

6. Interoperability and Standardization: Common standards are required for seamless integration across different platforms and systems.
7. Education and Adoption: Educating users, institutions, and regulators is crucial for successful implementation.

The above mentioned are some of the possible outcomes I could think of but for this to be achieved, I believe that institutional grade products must be created and by institutional- grade, I mean products that are built with security and transparency as it's major principle and not limited to being regulatory compliant.  Are there any projects currently championing this cause?

Standardisation isn't really a problem. It's pretty much inevitable. Of course there will be alternative methods as not everyone ever use same standards with everything.
But what comes to scalability, i find it funny that people are speculating with tokenomics like coins would be worth more so much that it makes the whole network too expensive to use. I find it similar to people valuing gasoline to so expensive that no one could afford to drive with cars.

Btw, Dusk is pretty much trying to everything you were talking about. But i am not sure how many obstacles they still have to overcome.

[Husires]

"De-Fi" apps, on the other hand, don't have any Fiat on/off ramps. They only use crypto for everything from borrowing to lending and staking. Those that have a Fiat on/off ramp are not truly-decentralized. Why make matters worse by forcing developers to modify existing "De-Fi" platforms to abide with KYC/AML laws? If successful, we would have something called "CeDeFi". It will move crypto away from its original principles. Is that the future we want for the industry?   

The success of "De-Fi" was based on providing loans with better returns than what banks give you, security compared to deposits in CEX, complete trust in the service provider or the need to pay taxes, as all transactions in CEX can be registered and subject to tax, so governments do not like "De-Fi" because it loses some liquidity outside the banking sector and because some of that liquidity may not be subject to taxes.

De-Fi developers may accept mandatory KYC if these platforms are banned or there are prison or fine penalties imposed on developers.