Recently, DeFi has faced criticism for its lack of performance and trust issues among traders. The concept of minimum viable decentralization (MVD) may be the answer to these challenges.
DeFi's Mistakes Compared to TradFi
TradFi, which evolved since the 1990s, has offered fast and reliable transaction execution through automated systems. In contrast, DeFi is based on the ideology of decentralization, leading to significant performance limitations such as slow blocks and unpredictability of transactions.
Infrastructure Needed by Traders
To attract serious traders, including high-frequency and institutional ones, DeFi must ensure high performance. This includes short block times, quick trade finality, and high availability. Upgrading infrastructure is a critical task for expanding DeFi's capabilities.
Speed and Decentralization: The Need for Compromise
For DeFi to become a universal financial standard, a balance between decentralization and performance must be found. The MVD concept suggests that protocols can retain the foundations of decentralization while providing the necessary skills for real markets.
To be successful, DeFi must focus on minimum viable decentralization, striking a balance between performance and decentralization principles. This will foster the growth and adoption of DeFi across a broader financial spectrum.
