DeFi’s Next Revolution: How Smart Money and Blockchains Will Collide in 2025

The trillion-dollar question isn't if DeFi evolves—it's who gets rich when institutional capital meets unstoppable code.

Wall Street's playing catch-up

Hedge funds still think APY stands for 'Annual Pretend Yields' while DeFi protocols quietly automate what armies of analysts fail to predict. The coming convergence won't be tidy—expect regulatory tantrums, infrastructure meltdowns, and at least three 'this changes everything' Twitter threads per hour.

The real test? Whether decentralized systems can absorb traditional finance's liquidity tsunami without becoming what they sought to replace. One thing's certain: The suits won't know what hit them.

Why DeFi alone isn’t enough

Despite its promise, DeFi has yet to break through to the mainstream. On the UX front, many products remain cumbersome, fragmented, or opaque, designed by developers for developers, not everyday users. From Frankenstein-like interfaces that lack intuitive design to convoluted onboarding flows, too much of DeFi still feels like a puzzle only insiders are equipped to solve.

From digital wallets and transaction fees to staking and siloed blockchain networks, entering the world of web3 appears considerably daunting. Though public enthusiasm for crypto has grown in recent years, nearly one in five cryptocurrency owners have had difficulty accessing or withdrawing their funds from custodial platforms.

Security remains a glaring issue. DeFi is often caricatured as an amalgamation of risk problems and regulatory red flags, as demonstrated in 2024, where $2.2 billion was stolen in crypto-related hacks and exploits, which revealed pervasive structural risks. But promising signs are emerging: the U.S. Senate just passed the GENIUS Act to regulate stablecoins, while recent SEC discussions have positioned DeFi as potentially embedded with Core regulatory values.

This exposes an underlying reality that the current state of DeFi is not equipped to scale on its own. It needs allies. More specifically, it needs the infrastructure, legal frameworks, and user trust that TradFi has spent decades building. While regulatory momentum is shifting, to win over TradFi loyalists definitively, DeFi needs formidable, tried-and-true support.

Rails reimagined: When legacy pipes meet programmable money

We’ve already seen early examples of this paradigm. Centralized exchanges proved long ago that a friendly façade is what turns arcane systems into mass-market products: Binance now counts about 275 million registered users worldwide. Solving the last-mile problem explains why CEXs have historically attracted more investors and traders than their DeFi counterparts, in no small part due to the outsized accessibility advantage.

That same principle is guiding the next wave of financial products. Consider how BlackRock’s BUIDL fund amassed $245 million in tokenized shares on ethereum (ETH) within the first week of its launch.

That reciprocal exchange of DeFi leaning on TradFi’s regulatory muscle, and TradFi adopting DeFi’s borderless rails, is becoming the natural next step to fuel sustainable growth. This convergence is not a compromise, but a realignment that offers a seamless entry point into a parallel financial system, while retaining familiarity with fiat payments and the confidence of traditional banking flows.

Invisible infrastructure, everyday impact

Like plumbing, good financial infrastructure should be invisible. UR, our borderless smart money app, embodies this principle with a unified account for fiat and stablecoins under full on-chain custody, making blockchain the invisible enabler of everyday finance.

But the real transformation is structural. By designing for both TradFi and DeFi, UR bridges systems that have long operated in parallel. This ensures that users do not have to choose between a dollar and a stablecoin, or between compliance and decentralized control. It gives them both because the boundaries are already dissolving.

Institutional interest in crypto is no longer abstract; it is a strategic imperative. Governments are crafting tax exemptions, legal frameworks, and digital asset recognition policies. Banks are testing stablecoin issuance. The question is not whether the financial stack will evolve, but who will shape it. The timing, too, is no coincidence. Institutional and regulatory interest in blockchain is reaching new highs, with a growing appetite for robust infrastructure and real-world financial utility that leverages the transformative powers of decentralization.

If crypto wants to MOVE from a speculative sidecar to a central pillar, it must offer tools that are legible to regulators, usable to institutions, and capable of integrating seamlessly into consumers’ lives, without losing the open architecture that makes the technology revolutionary.

Banking built on blockchains, not built to replace them

For DeFi to matter, it must become part of the way people live—embedded, intuitive, and trustworthy. Just as the early internet faded behind the apps and platforms we use every day, DeFi will meld into the financial systems we already trust by embedding its principles into tools and interfaces that are usable, secure, and intuitive.

As institutions step into decentralized infrastructures and modular architectures, what we’re witnessing isn’t DeFi compromising to fit the old world; it’s the financial stack being rewritten to reflect a new one.

To get there, we need more full-loop systems, equipped with products that abstract complexity without erasing control. Above all, we need to build for the users we haven’t yet reached. That’s what the next chapter of finance demands: not a parallel system but a unified one that is open, resilient, and built for how people truly live, spend, and save.

Timothy Chen is the Global Head of Strategy at Mantle. Previously, he was a partner at MSA, a global $2 billion investment fund investing in early and late-stage technology companies globally, such as Uber, Airbnb, Palantir, Meituan, Nubank, and Animoca Brands. He also incubated the fund’s proprietary Bitcoin mining operations as well as launched a Chinese equities-focused ETF. He is now driving Mantle’s initiatives across new financial products, including the MI4 (Mantle Index Four) Fund and UR, the borderless smart money app.