Reimagining Financial Systems: What Does 2025 Hold for DeFi’s Ambitions?
Could DeFi challenge traditional financial paradigms in 2025 and beyond? It has already proven capable of generating healthy yields, handling loans, and offering the opportunity for people to self-custody their own money. Now, with improved tech, unprecedented speed from L2s, and innovation being made across all DeFi sub-sectors, next year may prove crucial. On the flip side, it could require some compromise with regards to compliance, challenges due to legislatory clarity, and the need to scale institutional investment.
To discuss how Decentralized Finance plans to innovate to the point of no return and replace large swathes of TradFi, we’ve invited industry thought leaders to explore this transition and add their expert predictions. Are we in the early stages of a financial revolution to democratize financial access, or are some challenges insurmountable for this new model of value exchange?
What technological breakthrough or innovation do you believe will be the critical inflection point that transforms DeFi in 2025?
“The turning point for decentralized finance (DeFi) in 2025 will come from integrating compliance-ready infrastructure with enhanced interoperability. Platforms that connect different networks while meeting global regulatory standards will drive mass adoption. Essential tools like modular blockchain architectures and privacy-preserving compliance will help bridge the gap between decentralization and regulation, positioning DeFi to compete effectively with traditional finance.” - Piotr Skoczylas, CEO of Eterna Hybrid Exchange .
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“More services and CEX features are steadily moving on-chain as different protocols innovate in unique ways. The launch of Hyperliquid this past week and the anticipation leading up to it shows a clear demand for decentralized, on-chain protocols. Still, only 2% of all crypto perpetual trading happens on-chain. However, as systems and protocols facilitating these transactions improve, market participation and trading volumes are likely to follow. - Shawn O’Donaghue, Community Lead at Orbs .
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“I believe that 2025 will be the year that we see advancements in cross-chain technologies that unify the currently fractured L2 ecosystems that comprise DeFi, making for the start of a unified experience that seamlessly leverages liquidity and dApps across all of DeFi.” - Adam Knuckey, COO and Co-Founder of Dolomite .
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“A robust cross-chain liquidity layer will be the real game-changer for DeFi. Right now, DeFi ecosystems are fragmented across multiple blockchains, leading to siloed liquidity and complicated bridging solutions. The introduction of universal liquidity pools and advanced interoperability standards will allow capital to move frictionlessly, ensuring higher efficiency and stronger price discovery. When collateral and yield opportunities flow unimpeded across networks, DeFi will shed its current fragmentation and step onto the global financial stage as a cohesive, essential asset class.” - Ran Yi, Co-Founder at Orderly Network .
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“BTCFi, A.K.A Bitcoin DeFi. Well, Bitcoin is the largest crypto asset by far, the most accepted worldwide from a regulatory perspective, and also by regular users. The development of DeFi and key infrastructure on BTC is being speed-run, as teams are building upon their learnings and avoiding mistakes from EVM and alt-L1 ecosystems.”
“Babylon's self-custodial staking solution is laying the foundation for retail users and institutions to enter at scale, having recently more than doubled their TVL to $6B. SatLayer, as the designated restaking partner, unlocks additional rewards on top of Babylon and brings BTC liquidity and security to applications and infrastructure.” - Luke Xie, Co-founder and CEO of SatLayer .
How do you see regulatory developments and institutional adoption fundamentally reshaping DeFi over the next 12 months?
“Regulatory clarity is reshaping the DeFi landscape, compelling projects to adapt or risk being left behind. Frameworks such as MiCA will establish a more secure environment for users and institutions, filtering out unprepared projects and paving the way for institutional investment. As institutions increasingly recognize DeFi's potential for efficiency and innovation, platforms that blend compliance, scalability, and user-focused design will lead the way in this transition. The next 12 months will be crucial in defining the future of DeFi, transforming it from an experimental domain into a trusted and transformative financial system, poised for integration with the broader global economy.” Piotr Skoczylas, CEO of Eterna Hybrid Exchange .
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“When it comes to regulatory developments, we’re seeing countries make definitive moves to either embrace crypto or reject it outright. In the US, you have Donald Trump reportedly TWAP’ing into ETH, Ondo, and other protocols, all while claiming he plans to build a BTC reserve. Meanwhile, in the UK, they’ve announced a ban on pump.fun, and rumors are circulating that the government may soon ban “public crypto offerings”.
“As far as DeFi is concerned, we could be entering a period of legitimization that the industry has been striving for. With proper rules and regulations taking shape, institutional investors may finally feel confident deploying capital into the space, which if so would drive rapid growth and investment.” Shawn O’Donaghue, Community Lead at Orbs .
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“2025 will see the most crypto-friendly administration in the history of crypto, which I believe will open the doors for regulatory clarity and advancement that allows for a degree of institutional adoption of DeFi that has been long wished for.” - Adam Knuckey, COO and Co-Founder of Dolomite .
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“On one side, regulators worldwide are getting more vocal about defining what constitutes a DeFi service and setting parameters for compliance. That could lead to a wave of projects adopting more transparent, KYC-friendly approaches while still retaining decentralized underpinnings.”
“On the other side, we’ll see the continued rise of institutional DeFi pilots: banks and FinTechs experimenting with on-chain settlement and tokenized assets. As these experiments mature, the lines between centralized and decentralized finance will blur. The big shift will come when regulated financial products begin using DeFi rails under the hood, effectively pulling in institutional liquidity and mainstream trust. That’s when DeFi transitions from an experimental playground to a foundational layer of global finance.” - Ran Yi, Co-Founder at Orderly Network .
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“Massive changes towards clarity and friendliness! It doesn't actually matter when the US enacts a Bitcoin strategic reserve - the more it's discussed, the more other countries will front-run the US and accumulate BTC first (at minimum as a x% hedge against a non-zero chance of the US enacting a strategic reserve). This then makes the US more likely to establish its own strategic reserve, and accelerates the pace at which institutions also accumulate BTC.”
“The stage is then set for BTCfi, given the much broader adoption of BTC by nation states, institutions, and network states (L1s). Holders will become more interested in yield as projects like Babylon and SatLayer scale and show resilience, and as the benchmark yield for BTC rises” - Luke Xie, co-founder and CEO of SatLayer .
As revealed by these expert contributors, DeFi’s 2025 story is yet to be written, but the plot will include a mix of innovation, compliance, and institutional trust. Cross-chain interoperability and regulatory frameworks will also prove to be main characters in this tale. By the end, by reading between the lines, the new narrative will hopefully be trust, mainstream adoption, and transformation.