Massive Opportunity: TradFi Could Move Onchain Due to Horrible Banking Experiences
Traditional finance, often referred to as TradFi, is facing a critical juncture. According to Stani Kulechov, the founder of Aave Labs, frustrations with traditional banking experiences are already driving a significant shift towards financial technology, or fintech. The next logical step for this evolution? A move further onchain, leveraging the power of blockchain technology and decentralized finance (DeFi).
Why Poor Banking Experiences Fuel the Shift to Onchain
Kulechov highlighted at EthCC 2025 that negative experiences with traditional banks have pushed many users and businesses towards fintech applications. These digital solutions have successfully captured substantial market share by offering more streamlined and user-friendly services compared to legacy banking systems.
He noted that a large portion of the global population already uses digital wallets, indicating a readiness for digital transactions, even if not yet fully onchain. The challenge now is to transition this existing digital adoption into the decentralized, transparent environment that blockchain offers. Projects like Aave are actively working to integrate core financial utility into these decentralized mediums.
RWA Tokenization: Unlocking the Onchain Opportunity for TradFi
A key driver for bringing TradFi assets onchain is the tokenization of real-world assets (RWAs). Kulechov described this as a “multi-trillion-dollar opportunity” for the crypto sector to engage with traditional finance players.
Consider the vast categories of traditional assets:
- Real estate
- Government bonds
- Equities
- Corporate bonds
Placing these assets on a transparent ledger within a programmable environment could lead to significant efficiency gains. By getting this “legacy stuff onchain,” it’s possible not only to improve existing asset handling but also to create entirely new types of assets and financial products that are currently impossible due to the inefficiencies of traditional systems.
DeFi stands out as the only technology capable of facilitating this transformation in a borderless manner.
The Challenge: Making DeFi 10x Better for Mass Adoption
Despite the potential, Kulechov acknowledged that DeFi is not widely known by the general public. Many prominent protocols, including Aave, still have user numbers far below those of popular fintech apps. For mass adoption to occur, DeFi needs a compelling value proposition.
The core message is clear: to compete with traditional finance and drive global change, DeFi solutions must be significantly better. “Your product needs to be 10 times better,” Kulechov stated. When bringing traditional assets and value chains onchain, the offering must provide superior benefits like simplicity and accessibility to truly attract users beyond the crypto native community.
TradFi’s Initial Steps Towards Onchain Exploration
While mass migration is still future-focused, some traditional financial players have already begun exploring blockchain technology. For example:
- BlackRock: Launched an Ethereum-based tokenized money market fund (BUIDL) in March 2024, which has rapidly grown. They also filed to use a digital ledger for share ownership in a Treasury Trust fund.
- Libre Capital: Announced plans in April to tokenize $500 million in Telegram debt, making it available to accredited investors for use as onchain collateral.
These examples demonstrate that the exploration and initial adoption of blockchain by TradFi are already underway, often driven by the potential for greater efficiency and new financial opportunities that traditional banking experiences may not offer.
Summary: The Path from Banking Experiences to Onchain Finance
The journey from frustrating traditional banking experiences to a future where TradFi operates significantly onchain is being paved by fintech innovation and the potential of DeFi and RWA tokenization. While challenges remain, particularly in making decentralized solutions user-friendly and clearly superior, the interest from major financial institutions like BlackRock signals a growing recognition of blockchain’s potential. The opportunity to create more efficient, transparent, and borderless financial systems by moving assets and processes onchain is substantial, potentially transforming the financial landscape as we know it.
