Co-CEO of Solflare, Filip Dragoslavic, explains why DeFi is becoming increasingly competitive with tradFi and CEXs.
Summary
- Filip Dragoslavic from Solflare explains the main trends in DeFi
- Share of DEX trading volume has grown from 1% to 25% since 2022
- Solana more than doubled its DeFi TVL, with even stronger performance in terms of volumes
- Privacy-focused payments could be the next big thing for DeFi
DeFi is making a comeback, and this time it could stick around. After two years of bear markets, the DeFi industry is approaching an all-time high, with tighter security, more users and a new air of institutional legitimacy.
To discuss the growth and future of DeFi, crypto.news spoke with Filip Dragoslavic, co-CEO of Solflare, a non-custodial wallet for the Solana ecosystem. He explained how regulations, stablecoin adoption and technical resilience are contributing to the growth of DeFi.
crypto.news: The DeFi total value locked (TVL) is approaching levels last seen in 2022. What’s behind this growth?
Filip Dragoslavic: There are a number of reasons. First, the rise of stablecoins is drawing the attention of both retail and institutional investors to DeFi. Stablecoins are growing rapidly, and this wave of innovation and adoption around them is directly translating into renewed DeFi activity.
Second, DeFi protocols have proven themselves in volatile conditions. While centralized exchanges like Binance struggled to fulfill orders during major sell-offs, DeFi platforms continued to function smoothly.
An example is Hyperliquid, which functioned flawlessly under pressure. That level of operational resilience makes people trust DeFi more, especially compared to centralized platforms that can fail or freeze during stress. Moreover, Hyperliquid stands out as one of the most successful companies based on profit per employee, and that gets people’s attention.
CN: How is this DeFi cycle different from the previous one in 2021-2022? And do you think this trend will continue?
FD: The last cycle was still dominated by centralized exchanges. At the time, it was decentralized exchange (DEX) volume. about 1% of total crypto trading; now it is approaching 25%.
Centralized exchanges still have advantages such as speed and reliability because they are essentially trusted databases. But this time we see more institutional players entering DeFi.
There is also a more favorable view from global governments, especially in the US. That gives DeFi extra legitimacy. People see it as the future of financial infrastructure.
CN: US regulators talk about innovation exemptions for DeFi. What is the meaning of that?
FD: It’s huge. It gives DeFi room to experiment: a kind of “f*** around and explore” approach, if I’m honest. Traditional finance has not developed meaningfully in recent decades. We live in a competitive, capitalist world, and if your systems don’t improve, you’ll be left behind. The US wants to stay ahead of the curve, so it’s giving DeFi some leeway to innovate and potentially lead the next generation of finance.
Crypto companies spend a lot of money on lobbying, but DeFi doesn’t really have such representation. Why do you think DeFi continues to receive regulatory attention?
Lobbying takes time, money and enormous resources. Only the largest centralized players – like Coinbase – can afford to do that. Although DeFi is growing, it is still in its infancy. Most of the ecosystem is focused on building things and making things work. Lobbying will probably come later.
But I think there are forward-looking people in governments who recognize the potential of DeFi and don’t want to ignore it. They give it room to grow, even without heavy lobbying.
How far are we in the development of DeFi? Are things working yet?
We’re still early. Traditional financial systems have evolved over decades. DeFi has only really taken off in recent years. We can learn a lot from TradFi, but DeFi also allows us to reinvent how financial systems can work.
Even wallets, which are essential for using DeFi, are still in their infancy. But the incentives to build meaningful things are strong. Users, volume, and even regulatory signals all validate DeFi. That is a powerful motivator for development.
Since 2022, we have seen major shifts in DeFi, with protocols holding the most value. Ethereum is stable, but Solana has doubled its TVL. Meanwhile, Tron and BSC are in decline. Why do you think that is so?
It comes down to technical capabilities. Solana (SOL) is faster and cheaper, allowing developers to focus more on building the app, rather than working around the limitations of the chain. Ethereum (ETH) still dominates for things like lend-lend protocols, such as Aave (AAVE). But Solana is ideal for high-volume, high-speed applications.
That said, TVL is not a perfect measure. Efficient platforms don’t always need huge TVL. Volume is more important in some contexts, and Solana has a lot of volume in the chain. It has been shown to withstand stress, so it is well positioned as a transaction chain.
DeFi still lags behind centralized exchanges in terms of volume and user numbers. Why is that so?
It’s a combination of two things: functionality and trust. First, it is simply easier to build trading interfaces on a centralized database. In DeFi, everything happens on-chain, which means coordination between many parties, not just one backend. It is a more difficult technical challenge.
The second problem is trust. Centralized exchanges have been around longer and have invested heavily in branding and marketing. They sponsor sports teams, organize major events and build recognition. That trust makes it easier to onboard new users.
How does the user experience in DeFi compare to centralized exchanges?
The user experience when it comes to using an interface is actually similar at this point. What’s different is the execution.
Centralized exchanges provide instant finality. There is no delay in block confirmation or petrol costs. You can easily do high-frequency trading, which DeFi cannot yet support due to infrastructure limitations. But that comes with a trade-off: all your assets are in one custodian.
It comes down to what users value more: speed and convenience, or control and decentralization.
DeFi talks a lot about ‘trust’, but there are still hacks and scams. Is branding really the problem?
A big differentiator in DeFi is self-control. You have ultimate control, but also ultimate responsibility. That’s a learning curve for users.
That said, scams and hacks happen everywhere, even in TradFi or in everyday life, like SMS scams. The good news is: DeFi is becoming more secure. The ecosystem is improving rapidly and security experts are learning something from every incident.
For example, our wallet users have over $20 billion in assets. We are constantly working on security because it is our top priority. Every day we have more confidence in our systems.
Are there any trends in DeFi that people are currently overlooking?
Yes, I think confidential or privacy-based transactions will be an important topic. Blockchains are transparent by design, but that makes it difficult to trade in volume. If there is no confidentiality, you run the risk of disclosing your position before or during a trade.
For example, if I want to share a dinner bill with friends, I don’t want them to see my entire wallet. Until privacy improves, it will be difficult to make crypto feel “normal” in real-world interactions.
That being said, many companies are working on this problem. I know privacy-focused solutions are about to launch on Solana.
Do you have anything else on your mind – bigger picture developments that you think are important?
Yes. Until recently, most development in crypto focused on the DeFi trading side: DEXs, liquidity, order books. But now a second pillar is taking shape: the stablecoin pillar.
There’s a lot happening in the stablecoin space, and it’s incredibly impactful. If we can get people to hold stablecoins on a regular basis, we will remove several barriers to DeFi adoption. People shouldn’t have to worry about converting fiat, buying ETH or SOL, or learning to play bridge. If they already own stablecoins, they are one step away from using DeFi. That’s huge.
I’ve heard a prediction that the number of DeFi participants could triple in the next two years. That would be huge for the space. And that growth will come from both stablecoins that make DeFi more accessible, and continued improvements in DeFi platforms.
These two pillars will reinforce each other. The more people own stablecoins, the more likely they are to engage with DeFi – and the better DeFi performs, the more reliable it becomes.
