“DeFi is finished.” This is how Maple Finance CEO and co-founder Sid Powell forecasts the future of crypto over the next few years.
However, this doesn’t signify the demise of decentralized finance; rather, it marks the conclusion of viewing DeFi as distinct from traditional markets.
“In a few years, institutions will no longer differentiate between DeFi and TradFi,” Powell told CoinDesk in an interview. “Ultimately, all capital markets activities will occur on-chain.”
Consider it this way: prior to the internet, goods and services were purchased in the conventional manner — by visiting merchants in person. Post-internet and the e-commerce boom, shopping continues, but the majority now occurs with just a click or two.
In Powell’s perspective, blockchains will serve a similar function in the financial services landscape. On-chain finance is simply the next technological layer where global markets will settle, akin to the internet revolutionizing shopping.
Nowadays, most individuals and businesses increasingly depend on e-commerce platforms like Amazon or Alibaba to procure their goods and services because it’s simpler, more efficient, and often cost-effective for obtaining the best value.
Powell anticipates a comparable transition within the traditional financial services sector, where crypto becomes the backbone for capital markets, with most transactions clearing and settling via public ledgers instead of antiquated systems. He also envisions an uptick in debt capital markets adopting crypto-native frameworks, such as BTC-backed mortgages and other asset-backed securities linked to crypto loans, alongside crypto card issuers whose receivables could be securitized and sold into capital markets.
Of course, a suitable regulatory framework must be established before this shift materializes.
And who will engage with this new financial system? Sovereign wealth funds, pension managers, insurers, and large asset managers—or “the managerial class that governs the world’s financial markets,” as Powell describes it—will primarily hold this new “on-chain paper.”
This is what Powell implies when he states, “DeFi is dead,” where blockchain technology becomes the leading infrastructure layer, with no need for users to realize they are utilizing a novel technology for everyday financial transactions.
The $50 trillion reason
While a complete transformation may take time, indications of such change are already observable throughout the system.
Consider stablecoins as an illustration. Following the enactment of the GENIUS Act, financial powerhouses are widely adopting or considering their use. PayPal has introduced PYUSD, Société Générale has launched euro- and dollar-pegged stablecoins via its crypto division, and Fiserv has rolled out FIUSD for use across payment networks, with Wall Street titans like Bank of America (BAC), Citi, and Wells Fargo (WFC) signaling interest in following suit.
Visa (V) and Mastercard (MA) may not be issuing coins, but they are developing stablecoin settlement infrastructures that could hasten adoption and heighten competition with tokenized deposits and other bank-led digital currencies.
This is where Powell makes his most assertive prediction regarding the new financial landscape: stablecoins could facilitate $50 trillion in transactions by 2026, surpassing major card networks.
He positions stablecoins as a formidable yet still underestimated asset for merchants and small enterprises. Retailers typically operate with slim margins and incur 2%-3% fees to Visa and Mastercard for card payments.
Utilizing stablecoins for settlement can dramatically lower these costs, effectively returning several percentage points of revenue back to merchants.
That economic incentive, Powell contends, will drive small businesses to swiftly embrace stablecoins, with neobanks and eventually traditional banks issuing and supporting them directly.
He even went as far as comparing large stablecoin issuers to insurers like Berkshire Hathaway, as they benefit from a negative cost of capital. Users deposit dollars, and issuers invest those funds in safe assets, like Treasury bills, generating a yield while paying no interest on their liabilities. If they act prudently, the difference between what they earn and what they owe becomes a potent engine for compounding returns, resembling how Warren Buffett leveraged insurance float.
Trillion-dollar market
What implications does this have for the current DeFi market?
It could reach up to $1 trillion in the next few years, predicts Powell. The space is cyclical and dependent on macro factors, but he asserts it’s expanding faster than conventional finance, closely connected to the trajectory of stablecoins and tokenized assets. The total DeFi market cap is currently about $69 billion, according to data from CoinMarketCap.
As the circulating supply of stablecoins increases, and more real-world and crypto-native assets are tokenized, he anticipates the total value locked in DeFi will rise in conjunction.
In his opinion, the growth of DeFi is fundamentally “a function of the market cap of stablecoins and tokenized assets.”
Put together, Powell’s vision emphasizes less a battle between crypto and traditional finance and focuses more on how completely traditional finance becomes crypto-native. If he’s correct, the “death of DeFi” won’t just erase the lines between DeFi and TradFi; it will submerge into the infrastructure of a new, blockchain-powered market system.