a16z crypto: TradFi doesn't want DeFi, but selectively adopts blockchain technology

Odaily Odaily News a16z Crypto released an analysis stating that traditional finance (TradFi) is not merging with decentralized finance (DeFi), but is selectively adopting blockchain technologies that fit its own needs. A long-standing narrative in the crypto industry has been 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 driving force for traditional finance to adopt blockchain is not the concept of decentralization, but commercial efficiency. As long as blockchain can help institutions reduce costs, improve settlement efficiency, expand distribution channels, and strengthen customer relationships, institutions will adopt the technology. "TradFi is not entering DeFi; it is leveraging the parts of DeFi that suit its operational models and reshaping these technologies according to institutional requirements."

a16z Crypto stated that a new category of financial infrastructure may emerge in the future – programmable financial infrastructure based on the underlying blockchain but optimized for institutional constraints. The blockchain technologies currently being adopted by institutions primarily include:

Atomic Settlement: Reduces counterparty risk and decreases collateral capital requirements;

Shared Ledger: Lowers the cost of back-office reconciliation;

Programmable Money: Automates interest payments, margin management, and corporate actions;

Automated Market Maker (AMM) Mechanism: Reapplied to on-chain foreign exchange and tokenized asset pricing.