Opinion by: Doug Colkitt, a founder of FOGO contributing
To adhere to its ethos of Decentralization Above all, the crypto industry often forgets its main user: the businessman. What exists today is an ecosystem that prioritizes philosophical principles rather than practical use cases – something that simultaneously banned the most serious businessmen from participating and encouraged decentralized financial users (DEFI) in more centralized offerings.
If the DeFI is set on the scale beyond the speculation – and offers a significant alternative to the tradfi – then the main focus should be performance.
Enter the minimum viable decentralization (MVD). The MVD can offer a pragmatic plan to maintain resistance to censorship without sacrificing the speed, reliability and availability of real markets. Here’s how MVD is emerging in real time.
Tradfi is right where Defi goes wrong
The 1990s marked a historic shift for Tradfi. Since the futures dawn in the 19th century as a new way to redeem wheat and corn prices, these markets have evolved in one of the most liquid financial ecosystems ever.
The end of the 20th century marked a significant leap forward to the fall of manu -essay. Thanks to electronic trading platforms, high-frequency trading (HFT) has taken the world by storm. Tradfi has laid the basis for technical infrastructure designed to deliver its major users – merchants – by speed of reliability and implementation. Tradfi is a worldwide scale and gains institutional trust by providing entrepreneurs exactly what they need to develop.
In contrast, Defi is born because of ideology: it emphasizes decentralization at all costs, without permission to access and fight censorship. In doing so, performance limits such as sluggish blockimes, unpredictable transaction integration and fragile end.
For example, Ethereum’s 12-15 second blocks are not available for the HFT, forcing successful projects such as DYDX to move in full from the chain. At the top of that, the highest possible amount (MEV) allows validators to front-run or sandwich trading, compromising user trust and quality of implementation.
These flaws are more than technical hiccups, which is why Defi’s foundations can slow down price integrity, create slippage and keep serious entrepreneurs to participate. Today, even the most popular struggle of defi protocols to maintain power users and drive significant volume, proving that, while ideology is inspired, infrastructure is what scales are.
Traders need infrastructure that works
Although the DeFI was created to relieve problems associated with centralized platforms (mediators, long periods of settlement and a lack of transparency), entrepreneurs-especially high and institutional-care-care businessmen than all. In other words, they want the implementation measured in millisecond (not seconds), uptime during volatility and trading quickly, predictable and fair.
If Defi wants to compete with Trade, the decentralized infrastructure must meet new technical standards, such as HFT readiness. This includes sub-100ms block times, a second finality, high-throughput order book, Sub-50ms integration latency, MEV protection and 99.999% uptime are formed.
Related: Our current data infrastructure threatens Defi’s future
Today, these qualified ones may seem like luxury, but honestly, they are stakes on the table to leading traders around the world. Therefore, if Defi wants to become a new global financial standard, it will need to start prioritizing what entrepreneurs care about.
Resistance of speed and censorship may come together
One of the biggest problems with the web3 is that it often treats decentralization as a binary. Most builders believe it should be maximized at all costs, or otherwise they are sold. Top systems take into account tradeoffs and do not adhere to the principles of purity only. That is where the minimum viable decentralization (MVD) thesis is playing.
It argues that protocols can only maintain enough to maintain what sets the defi without sacrificing performance. The resistance to censorship and accessibility without permission is significant at the end of the day. Maintaining these ideas while creating infrastructure that can deliver real markets is possible. In MVD, builders may consider the least decentralization possible while guaranteeing unreliable implementation. From there, they can optimize for what is most important in making real trade, such as latency, end and throughput.
The new chains are leading the way this shift by balancing user sovereignty with lean validator sets, speedy approval and parallel implementation. This is just a starting point: MVD is still in its early stages, and many builders have a unique opportunity to create infrastructure at the same time open, fair and available.
MVD raised the standard for Defi’s next chapter
For Defi to move its experiment phase, it should fully embrace the MVD. The demand for speed is apparent: institutions buy more digital assets day -day, and retail investors are experimenting more.
Today, the Defi is growing rapidly, and derivatives are the fastest growing sector. Perpetuals decentralized markets are set to process more than $ 351 trillion by 2031 (growing more than 138% year-on-year), competing on the tradfi scale. With an early momentum from platforms such as Hyperliquid And aevo, it becomes clearer that the defi has real legs. At the same time, these protocols are still limited by layer-1 dependencies, rollup latency and unpredictable settlement hours.
MVD has to play a bigger role. Now, Defi cannot rely on purity alone. It should rely on performance, speed and adequate decentralization to earn the trust of its users.
Opinion by: Doug Colkitt, a founder of FOGO contributing.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
