DeFi’s infrastructure needs to evolve significantly if it intends to compete with traditional financial systems and drive mass adoption. Despite the promise of decentralized finance, current platforms fall short in areas like liquidity, speed and cross-chain compatibility. Without addressing these critical shortcomings, DeFi will struggle to gain the trust and adoption needed to rival TradFi. To truly bring DeFi into the mainstream, we must develop frameworks that are as secure, scalable and efficient as their TradFi counterparts.
Global financial infrastructures like Swift and other core systems were the backbone of the digital finance boom in TradFi. They enabled seamless cross-border transactions, improved trust in financial institutions and ultimately aided global adoption. Just as the pillars of TradFi required strong, innovative frameworks to thrive, DeFi must evolve beyond its current limitations. The exponential growth of Web3, onchain trading and decentralized finance demands infrastructure that can not only keep pace but also drive further adoption.Â
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Centralized exchanges have arguably come closest to emulating the foundational pillars of TradFi, as evidenced by their broad user bases and large trading volumes which comfortably outstrip those of DeFi platforms. However, the downfall of FTX in 2022 served as a harsh reminder of the risks inherent in using custodial services, while underscoring the value of decentralized, non-custodial solutions. This is where DeFi has the opportunity to truly differentiate itself — but only if the underlying infrastructure is up to the task.
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So, which infrastructure options do developers have to build orderbook-based platforms in the DeFi space?
While some devs may opt for crypto exchange clone scripts — white-label solutions that replicate existing CEXs or DEXs — these often fall short in crucial areas. Although they can reduce development time, they lack the foundational elements necessary for long-term survival and success. Furthermore, while there are a number of CEX clone scripts available to build orderbook-based platforms, there aren’t that many options for orderbook-based DEXs.
In my view, any infrastructure designed to support successful DeFi platforms must excel in four key areas. First, deep liquidity is essential — it’s the lifeblood of any trading system. Without sufficient liquidity, platforms will struggle to offer competitive spreads, leading to a poor user experience and ultimately, failure.
Read more from our opinion section: Bitcoin’s evolution into DeFi is inevitable — and it’s about time
Next, omnichain functionality — the capacity of assets to move freely and securely across multiple blockchains — is crucial for enhancing liquidity and creating new trading opportunities. This process can be simplified further by chain abstraction, which reduces the complexities involved in cross-chain transactions and makes the entire ecosystem more seamless.
Modularity is another important factor. Developers need the flexibility to customize infrastructure to meet the specific needs of their platform. A modular approach allows them to choose the components that best serve them, driving innovation and adaptability.
Finally, there’s speed. In trading, speed is everything. High latency kills market opportunities, and slow platforms will inevitably drive users away. For any DeFi platform to be taken seriously, high-speed infrastructure is non-negotiable.
By integrating features like deep liquidity, omnichain compatibility, modularity and speed, developers can unlock significant advantages across various DeFi platforms. For example, in the case of spot or perpetual DEXs, shared orderbooks can offer users better price discovery, reduced slippage and institutional-grade trading experiences — benefits typically associated with CEXs.
Read more from our opinion section: DeFi is the future (and a hack can’t convince me otherwise)
Similarly, DeFi aggregators can leverage a unified liquidity pool, minimizing the fragmentation of liquidity across different networks. This allows seamless access to deep liquidity, without the need for separate integrations, thus creating a more efficient trading environment.
When it comes to institutional trading platforms, robust infrastructure ensures they can meet the high standards required by professional and algorithmic traders. With the right setup, it becomes much easier to implement advanced features like algorithmic trading, diverse order types and risk management tools, all supported by reliable onchain data and liquidity.
Even CEXs stand to benefit from this type of infrastructure. By developing decentralized counterparts to their platforms, CEXs can cater to users who prioritize the autonomy and transparency of DeFi, while still offering the speed and trading experience expected from centralized platforms. Hybrid models, such as WOOFi Pro and BTSE DEX, are already leading the charge in this area.
Similarly, derivatives and options platforms can take advantage of real-time price feeds, transparent order matching and efficient settlement processes, all directly onchain. This reduces the need to rely on centralized entities, offering a more decentralized and transparent trading ecosystem for complex financial products.
However, none of these advantages matter without active traders. Liquidity is the lifeblood of any market and without it, the crypto market as we know it would cease to function. When deep liquidity and fast execution are present, traders benefit from tighter spreads, reduced slippage and a superior overall trading experience.
To drive mass adoption, the focus must shift from grand promises to tangible advancements. Imagine a world where decentralized exchanges and platforms offer the same reliability and efficiency as traditional finance, where traders can move assets across chains without friction, and where high-frequency trading happens at the speed of thought. Building this future is necessary if DeFi is ever to move beyond the fringes and take its place as a serious contender in the global financial ecosystem.
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