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TradFi: Decentralizing Traditional Finance Isn’t as Easy as it Sounds

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TradFi (traditional finance) to decentralization isn’t just a matter of flicking a switch, says Motti Peer, the CEO of ReBlonde.

When people discuss the need to bridge the gap between DeFi and TradFi, they look at the modern online banking system and wonder what’s stopping crypto projects from mirroring the same functionalities. Can’t we all take out mortgages on the blockchain without an intermediary, cancel miscalculated transactions, or walk into a convenience store and pay for groceries with cryptocurrencies? For the most part, we can’t, and not just for a lack of a coherent regulatory framework. 

It’s true that selling a fraction of the house you put on the blockchain as a security token won’t quite legally fly in most places yet. A proper regulatory framework is important, but the problem with creating blockchain use cases that replicate traditional finance runs as deep as the technology itself. 

Let’s start with DeFi, an industry of blockchain use cases that lacks some of the basic functions available in traditional finance. DeFi is web-based, and in many ways an ecosystem independent from outside industries, so the potential to build use cases is infinite and pure. As such, it’s fruitful to look at the technical challenges plaguing the industry, such as the need to adapt real estate law to allow for tokenizing properties.

TradFi vs Defi: The limiting aspects

Smart contracts are at the core of DeFi and most blockchain applications. A total of 1.45 million smart contracts have been created in Q1 of 2022 alone. Creating any kind of DeFi protocol necessitates deploying a smart contract, a time-consuming process that can cost between $7,000 and $45,000 in development. The audit phase can reach a maximum of $100 thousand, and all that before touching on the deployment costs.

Regardless of whether you’re a small crypto project or a legacy corporation looking to adopt smart contracts, this is no small price—especially in the current economy. Companies are laboriously working to find ways to make the most out of smart contracts and r


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