BitMart Founder Introduces “LayerFi”: A New Framework for the Future of On-Chain Finance

In the aftermath of one of the largest liquidation occasions in crypto historical past, BitMart Founder Sheldon Xia has launched a brand new thought piece introducing the idea of LayerFi (Layered Finance) — a framework that seeks to redefine how on-chain monetary methods evolve towards maturity. Written in response to the October 11 market turbulence, the essay examines how volatility reveals the resilience and construction of blockchain-based finance, providing a deeper reflection on effectivity, belief, and system design.

Opening: Let’s Start with a Simple Question

On October 11, 2025, the cryptocurrency market skilled the largest liquidation occasion in historical past. If you’re following this house, you would possibly ask: Does such volatility imply the blockchain experiment has failed? The reply is certainly no. But I’d such as you to suppose from a distinct angle: on this excessive stress take a look at, which methods collapsed? Which survived? Which have been questioned? More importantly, which methods will emerge stronger?

Let me first introduce my background. I’m the founder of BitMart, and I entered the blockchain business in 2013. Over the previous practically 13 years, our platform has processed trillions of {dollars} in transactions and served over 12 million customers. I’ve witnessed the full transformation of this business from speculative frenzy to infrastructure constructing. Today, I need to share a core viewpoint: LayerFi will not be a stopgap measure however the inevitable selection for on-chain finance to mature.

To perceive this viewpoint, we first must ask a extra basic query: what drawback is the monetary system really fixing?

One: Finance is Essentially a Balancing Game Between Efficiency and Trust

Let’s first set up a framework for considering. Imagine you need to lend cash to a stranger. You face two core issues: First, how do you belief that they’ll pay you again? Second, can this lending course of be quick and low-cost sufficient to make it worthwhile for each events? These are the two basic propositions that monetary methods have been addressing for 300 years: belief and effectivity.

Looking Back: How Financial Systems Establish Trust

Let’s shortly evaluate historical past. In 1717, Britain established the gold customary, utilizing gold—a scarce bodily asset—to ensure the worth of forex. This was humanity’s first use of one thing “tangible and visual” to resolve the belief drawback. You can think about it this manner: I provide you with a bit of paper forex, however behind that paper is actual gold as backing, which you’ll be able to change at any time.

By 1944, the Bretton Woods system made the belief mechanism extra complicated. The greenback was pegged to gold, and different nations’ currencies have been pegged to the greenback. It was like constructing a belief pyramid: gold at the backside, the greenback in the center, and different currencies at the prime. But this method collapsed in 1971 when Nixon introduced the greenback would not be tied to gold. From then on, belief started shifting from “bodily belongings” to “institutional guarantees” and “market mechanisms.”

Meanwhile, effectivity enhancements have been additionally underway. In the Nineteen Sixties, computerized clearing methods emerged, remodeling monetary transactions from handbook matching to digital processing. Think about it—in the previous, finishing a transaction required merchants shouting and gesticulating on the change ground; now it simply takes a mouse click on. This is a basic instance of how expertise improves effectivity.

Here’s an vital perception: each main transformation in the monetary system is actually about rebalancing the relationship between effectivity and belief.

The Dilemma of Traditional Finance: Trust Costs Eroding Efficiency, Rising Friction Coefficients

Now, let’s take a look at the present conventional monetary system. Its core logic is: establishing belief by way of middleman establishments. Banks, exchanges, clearinghouses, and custodial establishments—these intermediaries act as “belief nodes,” offering ensures to each events in a transaction.

This system labored nicely in the industrial period. But in in the present day’s digital, globalized world, issues are rising. Let me provide you with a concrete instance:

Suppose you’re in China and need to switch $10,000 to a good friend in the United States. This cash must undergo a number of layers of establishments: your opening financial institution, correspondent financial institution, receiving financial institution, and so forth. Each layer prices charges and conducts compliance opinions. The whole course of would possibly take 1 to three enterprise days, and charges might attain tens and even tons of of {dollars}. More importantly, you possibly can’t see in real-time the place your cash is—you possibly can solely “belief” that these middleman establishments will deal with it correctly.

Global monetary establishments spend tons of of billions of {dollars} yearly on compliance, accounting for about 15% of massive establishments’ working prices. What does this imply? It implies that each time you employ monetary companies, a good portion of the value goes towards “proving this method is reliable”—that is their friction coefficient.

Think about it: what would occur if there have been a expertise that would scale back belief prices whereas sustaining and even bettering effectivity?

Blockchain’s Breakthrough: Replacing Intermediaries with Algorithms

This is the place blockchain expertise is available in. In 2008, Satoshi Nakamoto revealed the Bitcoin whitepaper, proposing a revolutionary thought: we will use “distributed ledger + proof of work” to determine belief with out counting on middleman establishments.

Let me clarify this idea with an analogy. Traditional finance is sort of a centralized library the place all ledgers are saved by a librarian, and you must belief the librarian gained’t tamper with information. Blockchain is like copying this ledger 1000’s of occasions and distributing it to everybody. Whenever a brand new transaction happens, everybody’s ledger updates concurrently. If somebody needs to tamper with information, they’d want to switch 1000’s of ledgers concurrently—technically, virtually unimaginable.

Between 2013-2015, Ethereum’s emergence additional superior this revolution. Vitalik Buterin launched the idea of “sensible contracts.” This means monetary guidelines could be written as code and executed routinely. Using the similar instance: whenever you need to switch cash to your American good friend, sensible contracts can routinely verify your steadiness, execute the switch, and replace each accounts. The whole course of requires no intermediaries, takes only a few minutes, and may cost a little only some {dollars} in charges.

By October 2025, DeFi (Decentralized Finance) can have reached a Total Value Locked of $160 billion, with decentralized exchanges reaching peak each day buying and selling volumes of $80 billion. These numbers show: changing intermediaries with algorithms is not only idea however a actuality being practiced at scale.

But Pure Decentralization Encountered New Problems

Here, I would like that will help you perceive a crucial turning level. While DeFi achieved trustlessness technologically, it uncovered a brand new contradiction: expertise and belief appear mutually unique.

For instance, Pure DeFi requires customers to handle their very own wallets like MetaMask, dealing with non-public keys and seed phrases. It’s like supplying you with a protected key however telling you: in case you lose this key or enter the flawed password, all of your belongings can be completely misplaced, and nobody can assist you get better them. For non-technical customers, the barrier is simply too high.

On the different hand, pure centralized exchanges are handy to make use of, however you might want to fully belief the platform gained’t misappropriate your belongings. History has seen a number of situations of centralized exchanges collapsing or absconding, leading to heavy consumer losses.

This brings us to in the present day’s protagonist: LayerFi. It tries to reply a query: can we preserve decentralized belief whereas offering a centralized consumer expertise?

Two: Understanding LayerFi’s Innovative Architecture

Now, let’s dive deep into what LayerFi actually is. Many folks merely suppose LayerFi is a hybrid of CeFi (Centralized Finance) and DeFi (Decentralized Finance), a compromise resolution. But this understanding is moderately superficial.

LayerFi’s Core Design Philosophy: Layered Architecture

Let me first use a well-recognized analogy to open your considering. Imagine you’re utilizing an e-commerce platform like Amazon. The front-end interface you see is fastidiously designed—clear, simple to make use of, permitting you to simply browse merchandise, place orders, and pay. But in the again finish, there are extraordinarily complicated stock administration methods, logistics scheduling methods, and fee clearing methods operating. You don’t must see these methods or perceive their technical particulars.

LayerFi adopts precisely this strategy: the user-facing entrance finish pursues final expertise, whereas the invisible again finish anchors decentralized belief. But this isn’t merely “front-end and back-end separation”—it’s a deeper architectural innovation.

Let me use one other analogy that will help you perceive the essence of this innovation. Imagine a contemporary skyscraper. The basis is buried deep underground, bearing the weight of the whole constructing. It should be extraordinarily stable, would possibly take years to construct, however as soon as accomplished is unbreakable. The essential construction must be robust sufficient to help varied capabilities, however doesn’t must be as over-designed as the basis. And the statement restaurant at the prime is elegant and refined, offering an final consumer expertise.

No one questions why the basis and restaurant use completely different supplies and designs—as a result of the issues they remedy are essentially completely different. LayerFi applies this engineering knowledge to monetary structure.

Detailed Explanation of LayerFi’s Three-Layer Architecture

Now, let me break down this structure particularly. LayerFi divides the whole monetary system into three layers, every with clear obligations and the most fitted technical options.

Layer One: Settlement Layer—The Foundation of Trust

This is the basis of the whole system, accountable for ultimate asset settlement and safety ensures. At this layer, our core aims are decentralization and absolute safety, not velocity. Like a financial institution vault, we’d moderately or not it’s slower and extra complicated, nevertheless it should be completely protected.

Technically, this layer is normally the Ethereum mainnet or different mature Layer 1 blockchains. All crucial asset custody and possession verification is accomplished at this layer. Your belongings are locked right here by way of sensible contracts which can be fully clear, verifiable, and immutable. The platform has no authority to the touch these belongings; solely you possibly can switch them by way of cryptographic signatures.

The design philosophy of this layer is: it’s okay to be sluggish, acceptable to be costly, nevertheless it should be unbreakable. Just as you wouldn’t complain a few financial institution vault door being too thick or sluggish to open, as a result of that’s precisely what ensures safety.

Layer Two: Execution Layer—The Engine of Efficiency

This is the center layer of the system, accountable for dealing with massive volumes of each day transactions and computations. At this layer, we pursue high efficiency and low value. It’s like the essential construction of a constructing, needing to be robust sufficient to help varied capabilities, however not requiring the over-design of the basis.

Technically, this layer usually adopts Layer 2 scaling options, equivalent to Optimistic Rollup or ZK-Rollup. The core thought of these applied sciences is: course of large transactions effectively off-chain, then submit solely the ultimate leads to batches to the settlement layer. Like varied departments in an organization that course of massive volumes of enterprise each day however solely must periodically report summarized outcomes to headquarters.

Let me provide you with a concrete instance. Suppose you’re high-frequency buying and selling on a LayerFi platform, probably making dozens of transactions per second. If each transaction needed to be confirmed on the Ethereum mainnet, you’d be ruined by high Gas charges (probably tens of {dollars} per transaction) and sluggish affirmation speeds (probably a number of minutes). But by way of the execution layer, these transactions full immediately on Layer 2, costing solely cents, with millisecond-level velocity. Then the system periodically packages batch transaction outcomes and submits them to the settlement layer, guaranteeing ultimate safety.

This design provides you each velocity and price benefits whereas sustaining ultimate decentralized safety ensures. This isn’t compromise—it’s reaching optimum options at completely different layers.

Layer Three: Application Layer—The Interface of Experience

This is the layer customers immediately work together with, accountable for offering pleasant interfaces and wealthy performance. At this layer, we pursue the final consumer expertise. Like the restaurant on prime of a skyscraper, it should be elegant, snug, and straightforward to make use of.

At this layer, platforms can undertake centralized approaches to optimize expertise as a result of this layer doesn’t contain asset management.

You can register with a telephone quantity or e-mail with out understanding what a non-public secret is. You can get real-time customer support assist, identical to utilizing conventional monetary apps. The system routinely handles complicated technical particulars: Gas price calculation and advance fee, handle format verification, transaction path optimization, real-time market evaluation, and danger alerts. All that is to make your expertise as easy as doable.

But right here’s a critically vital design precept: though this layer is centralized, it has no authority to the touch your belongings. Like restaurant waiters who can take your order, pour water, and introduce dishes, however can’t take cash out of your pockets. Your belongings all the time stay locked in Layer One sensible contracts, and solely you possibly can switch them by way of cryptographic signatures.

What platforms can do at this layer is simply assist you assemble transaction directions, present interfaces, and optimize expertise. But the final authority to execute these directions all the time stays in your arms.

The Beauty of Layered Design: Breaking the Impossible Triangle

Now let me assist you perceive why this layered structure is a breakthrough innovation moderately than easy compromise.

Traditional blockchain methods face a well-known “unimaginable triangle”: decentralization, safety, and efficiency can not all be optimized concurrently. If you select excessive decentralization and safety (like Bitcoin), you sacrifice efficiency; in case you select high efficiency (like some new public chains), you compromise on decentralization.

LayerFi breaks this dilemma by way of layered design. The key perception is: completely different capabilities have completely different necessities for these three dimensions.

Asset custody should be decentralized and safe however could be slower—so we put it on the settlement layer. Daily transactions want high efficiency and low value however can reasonably scale back decentralization—so we put them on the execution layer whereas guaranteeing ultimate safety by way of periodic consequence submission to the settlement layer. User interface wants final expertise and could be fully centralized—so we put it on the software layer however by no means give it asset management.

This is like profitable logistics methods in actuality. For strange packages, use customary processes pursuing effectivity; for valuables, activate particular safety procedures; and for ultimate core settlement and legal responsibility willpower, have strict institutional ensures. Each layer optimizes for particular wants, reaching general steadiness of value, effectivity, and safety.

October 11 Event’s Real-World Validation: Architectural Advantages in Practice

Now let’s return to the opening query: why did some methods collapse throughout the excessive market situations on October 11, whereas platforms with sure architectures remained secure?

Traditional centralized exchanges simply expertise systemic danger contagion beneath concentrated clearing strain. Like dominoes, one hyperlink fails and the whole system is affected. Moreover, in excessive conditions, platforms would possibly undertake opaque danger management measures for their very own pursuits, even maliciously liquidating positions. Users fully rely on platform “goodwill,” however in life-or-death moments, platform “goodwill” is usually unreliable.

Pure decentralized DeFi, whereas free from platform malfeasance danger, faces conditions the place customers can not reply well timed to market adjustments attributable to on-chain execution delays and want for autonomous danger administration. When Gas charges spike to tons of of {dollars} throughout excessive markets, strange customers merely can not function. When liquidation costs set off, customers could be unable so as to add margin well timed attributable to technical points, leading to magnified losses.

LayerFi’s layered structure demonstrates distinctive benefits in such conditions:

Centralized front-ends can reply shortly, sustaining liquidity and repair continuity, serving to customers modify positions well timed. Systems can present real-time danger warnings, routinely modify Gas price methods, and optimize transaction paths. These options require highly effective centralized server help, however they really can save the day at crucial moments.

Decentralized back-ends guarantee liquidation course of transparency and equity by way of sensible contracts, avoiding human intervention. You can confirm in real-time that platforms execute liquidations in accordance with established guidelines moderately than working in black bins. Even if platform front-end servers crash, your belongings stay safely locked on-chain, executing in accordance with guidelines, and you may work together immediately with sensible contracts by way of different means to retrieve belongings.

This is sort of a ship crusing in a storm: the captain (centralized front-end) wants to reply flexibly, modify course well timed method, and direct sailors to deal with varied emergencies; however the ship’s construction (decentralized back-end) should be stable and dependable, unable to vary primary bodily guidelines attributable to the captain’s choices. The captain can determine which path to take, however can not change hull supplies or all of the sudden flip an iron ship right into a paper ship.

Think about it: is that this an architectural compromise? No, that is systematic innovation reaching optimum options at completely different layers. It provides you each skilled service help and retains final asset management.

Three: Why LayerFi Will Dominate the Next Five Years

Now you would possibly ask: since pure DeFi is theoretically extra excellent, why will LayerFi dominate the future? Let me clarify from three dimensions.

First Dimension: User Barriers Determine Market Boundaries

Let’s first do a thought experiment. Imagine on-chain finance must develop from its present 25 million month-to-month energetic customers to 150 million month-to-month energetic customers. What does this require?

The reply is straightforward: reducing utilization boundaries. The overwhelming majority of folks aren’t technical consultants. They don’t need to perceive non-public keys, seed phrases, or Gas charges. They simply need easy, easy-to-use monetary companies. Like most individuals utilizing PayPal or WeChat Pay, they don’t want to grasp the fee clearing expertise behind it; they only must scan.

Pure DeFi’s utilization boundaries doom it to serving solely area of interest teams. Once seed phrases are misplaced, belongings are completely unrecoverable. Numerous interactions harbor uncontrollable safety dangers. These are unacceptable dangers for strange customers. Manually setting Gas charges—any carelessness results in transaction failure or paying extreme charges. One flawed character in an handle sends belongings to the flawed vacation spot, by no means to be recovered.

LayerFi solves this drawback by way of “hiding back-end complexity, simplifying front-end interplay.” Users take pleasure in a Web2-level expertise whereas the underlying safety is assured by Web3 expertise. This is a prerequisite for mass adoption.

Important perception: expertise’s success lies not in how superior it’s, however in how many individuals it could actually serve.

Second Dimension: Institutional Capital Entry Logic

Now let’s look from the institutional traders’ perspective. Traditional monetary establishments handle tens of trillions of {dollars} in belongings. They’re concerned about on-chain finance however have two core issues:

First, unclear legal responsibility entities. Pure DeFi’s nameless governance construction implies that if issues happen, no accountable occasion could be discovered. This conflicts with primary monetary regulatory necessities. Imagine—if a pension fund needs to take a position funds into a totally nameless ruled protocol, would regulators agree? Would the board agree?

Second, asset custody safety can’t be verified. Institutions want auditable, traceable custody options, requiring third-party audits and clear compliance processes.

LayerFi solves these issues. The front-end has clear working entities that may bear obligation. Although the back-end is decentralized, all transaction information are on-chain, fully clear, and traceable. Asset custody is executed by sensible contracts whereas additionally having common third-party auditing establishments.

In 2025, on-chain RWA (Real World Assets) scale grew from $8.6 billion to $30 billion, a 249% enhance. Most initiatives undertake LayerFi structure. Why? Because conventional monetary giants like BlackRock want precisely this type of “compliance-monitorable + technically reliable” hybrid structure.

If the RWA scale is to develop to $5 trillion over the subsequent 5 years, LayerFi can be the important pathway for institutional capital entry.

Third Dimension: Regulatory Adaptability Determines Survival Space

Finally, let’s speak about regulation. This could be the most simply underestimated but in the end decisive issue.

Global regulatory businesses’ attitudes towards crypto belongings are shifting from “statement” to “regulation.” Their core demand is: reaching danger management and accountability traceability with out stifling innovation.

Pure DeFi struggles to implement primary regulatory necessities like KYC (Know Your Customer) and AML (Anti-Money Laundering) attributable to a scarcity of governance entities. Regulatory businesses dealing with fully nameless protocols can not implement efficient oversight.

Pure CeFi, although regulatable, carries single-point danger attributable to extreme centralization. Platforms would possibly misappropriate shopper belongings or manipulate markets, requiring steady robust regulation.

LayerFi achieves efficient compatibility with regulation by way of a layered structure. The front-end executes KYC, AML, and different compliance necessities, permitting regulators to obviously know who’s utilizing the platform. Back-end on-chain information are fully clear, permitting regulators to trace fund flows in real-time, stopping cash laundering and terrorism financing dangers.

Let me provide you with a historic analogy: PayPal’s emergence in 1998. It didn’t attempt to overthrow the banking system however acted as a bridge between conventional banking and web funds, selling mass adoption of digital funds inside a compliance framework.

LayerFi performs an identical position: it’s the bridge between decentralized beliefs and regulatory actuality, a viable path for on-chain finance towards mainstream adoption.

Four: The Four Cornerstones Supporting LayerFi Ecosystem

Now, let’s perceive in depth how the LayerFi ecosystem operates. I like to make use of constructing analogies: if modular structure is the skeleton, then RWA, composability, safety methods, and compliance frameworks are the 4 pillars supporting this constructing.

First Pillar: RWA—Value Anchor Connecting Virtual and Real

Let me first ask you a query: why was early DeFi thought-about a “fort in the air”? Because it primarily relied on crypto-native belongings like BTC and ETH. These belongings are extremely risky and virtually disconnected from the actual economic system.

Imagine: when international inventory markets crash, Bitcoin would possibly surge; when the Federal Reserve raises charges, Ethereum would possibly plummet. This disconnection from the conventional economic system makes DeFi tough to grow to be a real monetary infrastructure.

RWA (Real World Assets) introduction modified this case. Through blockchain expertise, we will tokenize conventional belongings like authorities bonds, shares, notes, actual property, cash market funds, and commodities, permitting them to flow into and commerce on-chain.

Let me illustrate with a concrete instance. BlackRock’s BUIDL fund invests in tokenized U.S. Treasury bonds. This means: an strange investor in Singapore can buy tokenized shares of U.S. Treasury bonds with just a few thousand {dollars}, having fun with the secure yields of U.S. Treasuries. In the conventional monetary system, this requires complicated cross-border processes and high thresholds.

In early 2024, the on-chain RWA scale was solely $8.6 billion. By September 2025, this quantity broke by way of $30 billion, rising 249%. Why so quick? Because regulation is steadily changing into clearer, expertise is maturing, and most significantly, conventional monetary establishments are beginning to take this area severely.

RWA not solely injects secure worth help into on-chain finance; extra importantly, it builds bridges between on-chain finance and the actual economic system.

Second Pillar: Composability—Financial World’s Lego Blocks

Now, let me assist you perceive a extra summary however extra vital idea: composability. This is the core gene distinguishing on-chain finance from conventional finance.

In conventional finance, if you wish to mix completely different monetary merchandise, you might want to cope with a number of establishments, signal a number of contracts,and  undergo a number of methods. For instance, if you wish to do an “arbitrage technique”: borrow on Platform A, purchase belongings on Platform B, promote on Platform C, then repay on Platform A. This course of would possibly take days, contain a number of accounts, and be operationally complicated with high danger.

In on-chain finance, all this may be accomplished in a single transaction. Different protocols, belongings, and capabilities are like Lego blocks that may be freely mixed. This known as “composability.”

Let me clarify composability at three ranges:

Morphological Composability: This is the most elementary. Like USB interfaces being standardized, any USB gadget can plug into any USB port. On-chain, all tokens observe the similar requirements (like ERC-20), and all protocols present standardized interfaces. Thus, USDC can commerce on Uniswap and lend on Aave with none adaptation.

Syntactic Composability: Like operate calls in programming languages. You can mix Uniswap’s buying and selling operate, Aave’s lending operate, and Compound’s rate of interest mechanism to create solely new monetary merchandise. Developers can mix present modules like constructing blocks.

Atomic Composability: This is the most superior. Multiple operations could be “all or nothing” in a single transaction. Either all steps succeed or all roll again. This avoids danger publicity in intermediate hyperlinks. Like dominoes—both all fall or none fall.

Now, AI expertise introduction has taken composability to a brand new stage. AI brokers can monitor markets in real-time and routinely mix optimum protocols and methods. For instance, when market volatility intensifies, AI can routinely switch your belongings from high-risk leveraged buying and selling to stablecoin financial savings; when arbitrage alternatives seem, AI can routinely invoke flash loans and DEX modules to finish arbitrage.

Composability evolves on-chain finance from “programmable finance” to “self-driving finance”—an innovation dimension that conventional finance can not think about.

Third Pillar: Security System—Technical Foundation of Trust

Let’s actually face an issue: safety danger is one of on-chain finance’s greatest challenges. In the first half of 2025, the DeFi business misplaced tons of of tens of millions of {dollars} attributable to varied safety points. If even primary safety isn’t assured, even the finest structure is empty speak.

How does LayerFi handle this problem? The reply is: set up multi-level safety protection methods.

Proactive Prevention: All new initiatives earlier than launch endure safety audits and scores by authoritative or market-recognized safety businesses. Like buildings requiring hearth security inspections earlier than use. Audit content material contains code logic vulnerabilities, permission management defects, asset safety dangers, and so forth. For core protocols, formal verification can also be wanted, mathematically proving code logic correctness.

For RWA initiatives, moreover technical audits, off-chain asset due diligence can also be required. For instance, tokenized bonds want verification of issuer credit score scores, authenticity of cash market funds, legality of inventory and observe custodial establishments, and property rights and valuation stories for actual property.

Active Monitoring: Platforms monitor on-chain transaction conduct in real-time. If irregular fund flows are detected—equivalent to massive transfers, frequent small transfers (cash laundering traits)—methods routinely set off alerts. When mandatory, freezing authority could be added to freeze accounts or droop transactions, coordinating with regulatory examination necessities.

Meanwhile, some platforms have launched on-chain insurance coverage mechanisms. Users can buy insurance coverage; if losses happen attributable to sensible contract vulnerabilities, insurance coverage offers compensation.

Post-Event Handling: If safety incidents actually happen, platforms have clear compensation mechanisms. Compensate affected customers by way of income swimming pools or insurance coverage funds. This addresses the “bear your personal losses” deficiency of pure DeFi fashions.

This system’s core philosophy is: we can not assure issues won’t ever happen, however we will stop as a lot as doable earlier than issues happen, reply well timed method after they happen, and deal with them correctly afterward.

Fourth Pillar: Compliance Framework—Institutional Guarantee for Long-Term Development

Finally, let’s speak about compliance. Many suppose compliance constrains innovation, however I need to supply a distinct perspective: compliance is the admission ticket for long-term growth.

Imagine opening a restaurant. You might select to not get a enterprise license or settle for well being inspections, saving tons of prices and hassle. But what’s the consequence? You could be shut down anytime, clients gained’t dare come, and you may by no means develop large. Conversely, in case you proactively comply, although upfront prices are greater, you achieve legitimacy for long-term operations, clients belief you, and you may develop large and powerful.

What is LayerFi’s compliance framework?

User End: Execute reasonable KYC and AML necessities. Users want to supply id proof when registering; massive transactions want extra verification. This isn’t to limit customers however to forestall platforms from getting used for cash laundering, terrorism, little one pornography, and so forth.

Platform End: Actively report platform monetary standing, danger management measures, consumer fund administration, and so forth. Suggest adopting registration methods moderately than establishing strict, complicated, cumbersome regulatory methods.

Asset End: RWA tokenization merchandise should be issued by way of licensed establishments. Native belongings could be accepted; future information belongings can be mentioned individually. For instance, tokenized U.S. Treasuries should be issued and custodied by monetary establishments holding related licenses.

Some platforms have even established complete compliance reporting methods. Users can view platform asset proofs in real-time; regulators can evaluate transaction information anytime. All asset custody info is on-chain, fully clear.

Compliance isn’t a constraint however the mandatory path for on-chain finance towards mainstream acceptance and broader recognition.

Five: Looking Toward 2030’s Financial Landscape

Now, let’s look towards the future. Based on present tendencies and technological evolution, we will fairly predict what is going to occur in the subsequent 5 years.

Numbers Speak: Rise of Trillion-Level Markets

First, let’s take a look at some key information. Grand View Research predicts the international DeFi market measurement will develop from $26.94 billion in 2025 to $231.19 billion in 2030, with a compound annual progress fee of 53.7%.

But that is solely calculated by income. If we take a look at the precise managed asset scale, predictions can be extra aggressive. I consider by 2030, DeFi Total Value Locked will develop from the present $160 billion to $2 trillion. More importantly, the RWA scale will explode from $30 billion to $5 trillion, with LayerFi platforms contributing over 80% of the proportion.

User numbers will even see qualitative leaps. From the present 25 million month-to-month energetic customers to 150 million month-to-month energetic customers. This penetration fee is equal to the cellular funds’ early-stage degree in 2015.

This means: on-chain finance will rework from professionals’ instruments to strange folks’s each day monetary companies.

Three Stages of Technological Evolution

Let me assist you perceive how this progress can be realized. I divide the subsequent 5 years into three levels:

Stage One (2025-2026): Infrastructure Breakthrough Period

This stage’s core job is solidifying foundations. High-performance monetary public chains Layer 1 + Layer 2 applied sciences will grow to be mainstream, with over 70% of transactions finishing on Layer 2 networks, and fuel charges dropping to cents. Imagine—at the moment, a transaction on Ethereum mainnet may cost a little tens of {dollars} in Gas charges; in the future, simply cents. Or on high-performance public chains like Sol, Hyper, sacrificing some decentralization in change for low-cost Gas charges.

Meanwhile, account abstraction expertise will revolutionize consumer expertise. You not must memorize seed phrases—you possibly can log into wallets utilizing telephone numbers, e-mail, or social accounts, or NFTs, id tokens. If you neglect passwords, you possibly can get better by way of “social restoration” mechanisms, so simple as recovering WeChat passwords.

This stage’s objective is: to make on-chain finance so simple as utilizing PayPal or WeChat Pay.

Stage Two (2027-2028): Application Explosion Period

When infrastructure matures, the software layer will explode. RWA asset classes will increase considerably, together with not simply authorities bonds however core city industrial actual property, SME credit score, and so forth. The tokenized authorities bond scale is predicted to interrupt by way of $1 trillion.

Traditional monetary establishments will take part deeply. Imagine: in your financial institution app, moreover buying conventional wealth administration merchandise, you can too purchase on-chain wealth merchandise with one click on; in your brokerage app, moreover buying and selling shares, you possibly can commerce tokenized securities.

More attention-grabbing is AI+LayerFi fusion. AI brokers will grow to be your “clever monetary advisors,” routinely configuring belongings primarily based in your danger preferences. When markets fluctuate, AI routinely rebalances for you; when arbitrage alternatives seem, AI routinely executes methods.

This stage’s attribute is: on-chain finance and conventional finance boundaries blur, and customers don’t even understand they’re utilizing blockchain expertise.

Stage Three (2029-2030): Ecosystem Maturity Period

At this stage, globally unified technical requirements and regulatory frameworks will kind. Modules developed by completely different nations and platforms can seamlessly interface. Regulatory methods converge; cross-border enterprise not requires repeated compliance.

On-chain finance will cowl complicated structured monetary merchandise. Tokenized bonds and actual property can immediately work together with yield modules, insurance coverage modules, and credit score modules, forming product complexity corresponding to conventional finance.

This stage’s hallmark is: on-chain finance turns into half of the international monetary infrastructure, coexisting with conventional monetary methods.

Where Are the Different Participants’ Opportunities

For Ordinary Users: You don’t must be a technical skilled. Just select a reliable LayerFi platform, and you may take part in investments beforehand solely out there to establishments. For instance, you should purchase tokenized U.S. Treasuries, shares, or cash market funds with just a few hundred USDC or USDT, acquiring comparatively high-quality belongings and returns; you possibly can take part in abroad actual property funding with out personally going overseas.

Meanwhile, you possibly can earn token rewards by way of platform governance participation, sharing in platform progress dividends.

For Traditional Financial Institutions: LayerFi is your finest digital transformation instrument. Short-term, you possibly can migrate some back-office processes on-chain, drastically lowering prices; mid-term, launch online-offline fusion merchandise, enhancing competitiveness; long-term, construct your personal LayerFi modules, increasing international markets.

Importantly, you don’t must disrupt yourselves—simply deal with LayerFi as a enterprise growth instrument.

For Regulatory Agencies: Suggest implementing risk-stratified regulation with completely different regulatory intensities for completely different danger ranges. Promote regulatory sandboxes, letting progressive initiatives take a look at in managed environments. Drive worldwide customary unification to keep away from regulatory arbitrage. Prioritize registration methods.

Conclusion: Blockchain and finance will evolve collectively in a symbiotic relationship moderately than in opposition.

Let’s return to the preliminary query: What is LayerFi? Is it a compromise?

I hope you now perceive: LayerFi isn’t a compromise however a steadiness achieved at greater dimensions. It isn’t merely splitting the distinction between centralization and decentralization, however reaching optimum options at completely different ranges.

When 2030 arrives and DeFi TVL breaks by way of $2 trillion with RWA scale reaching $5 trillion, we’ll uncover: LayerFi hasn’t disrupted conventional finance however established a symbiotic ecosystem.

Imagine this state of affairs: African farmers can immediately take part in international capital markets by way of telephones; New York traders can simply spend money on Asian actual property initiatives; strange folks can take pleasure in monetary companies beforehand solely out there to establishments; idle capital can shortly circulation globally to the place it’s most wanted.

In this state of affairs, conventional finance’s compliance and consumer belief completely combine with on-chain finance’s transparency and effectivity. Financial companies grow to be as versatile as constructing blocks; monetary methods grow to be as open as the web.

October 11’s market panic will finally subside, however LayerFi’s pushed transformation gained’t cease. Over the subsequent 3 to five years, initiatives deeply cultivating LayerFi and specializing in RWA and consumer expertise will grow to be business leaders. Ordinary members solely want to decide on compliant platforms to share on this transformation’s dividends.

Finance’s future isn’t selecting between effectivity and belief however their synergistic win-win; not opposition between centralization and decentralization however their complementary benefits.

LayerFi is exactly the key bridge to this future. And now’s the finest time to start this journey.

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