With JPMorgan reportedly planning to enter the crypto lending space by 2026, the race between Traditional Finance (TradFi) and Decentralized Finance (DeFi) is heating up. But according to industry insiders, DeFi still holds a competitive edge — thanks to better fees, broader collateral options, and permissionless access.
1inch Co-Founder: DeFi’s Strength Lies in Flexibility and Cost
Sergej Kunz, co-founder of DeFi aggregator 1inch, told Cointelegraph that DeFi protocols offer a smoother user experience compared to banks. Unlike TradFi, DeFi platforms allow for more diverse collateral, often delaying liquidations and adjusting fees based on market demand.
“DeFi lending platforms provide a simpler and more straightforward user experience,” Kunz emphasized.
TradFi institutions, on the other hand, generally charge higher fees and impose strict custodial and KYC requirements that many users find burdensome.
Market Segmentation Is Inevitable
Xapo Bank’s head of investments, Gadi Chait, said DeFi and TradFi will serve different segments of the market. While banks like JPMorgan might offer lower interest rates, the actual difference may not be dramatic once fees are factored in.
“DeFi typically has lower fees, which helps offset any rate differences,” said Chait.
Chait added that JPMorgan’s reach, while significant, only touches a small slice of the global crypto audience.
DeFi’s Core Advantage: Global, Permissionless Access
Zignaly’s co-founder Abdul Rafay Gadit highlighted that DeFi’s real power lies in its open access model. Anyone with a crypto wallet can borrow or lend without paperwork or geographic restrictions.
“DeFi should not compete on rates alone, but instead on censorship resistance, composability, and open participation,” Gadit noted.
XBTO’s George Mandres expects TradFi to dominate regulated crypto loans for major assets like BTC and ETH, but said DeFi will thrive in niche and long-tail markets where banks won’t go.
JPMorgan’s Entry Seen as a Net Positive
Despite potential competition, many see JPMorgan’s interest as a positive signal for the crypto sector. Ibanera CEO Michael Carbonara believes institutional involvement brings credibility, liquidity, and infrastructure to the space.
While some experts caution against overhyping TradFi’s delayed entry, the message is clear: DeFi still leads in innovation and accessibility, while TradFi adds legitimacy and reach.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.