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Chainlink co-founder Sergey Nazarov says DeFi, or decentralized finance, is closer to the mainstream than many realize, but real hurdles remain before it can scale to match traditional finance.
According to Nazarov, DeFi is about 30% of the way to broad adoption, and clearer rules could push that figure higher.
Reports have disclosed the sector has already seen rapid growth in lending protocols this year, with cumulative total value locked rising from $53 billion at the start of 2025 to more than $127 billion.
Nazarov said that DeFi could hit 50% global adoption once regulation and law explain why these systems can be trusted. That is a big if.
Regulators still wrestle with questions about onchain features, the role of intermediaries, and how to apply long-standing rules like KYC and AML to permissionless systems.
Curve Finance founder Michael Egorov has raised similar doubts, pointing to legal uncertainty, liquidity questions, and security risks in smart contracts.
Michael Selig, chief counsel for the crypto task force at the SEC, urged a focus on the technical details of onchain apps rather than just the buzzword DeFi.
Nazarov argues that clarity will likely start in the US and then influence other countries because many governments want compatibility with US finance.
According to analysts, that domino effect is the optimistic scenario. If US rules create a clear path for banks, funds, and custodians to place client capital into decentralized systems, institutional flows could accelerate.
Nazarov predicts that adoption could reach 70% when institutions have efficient means to move client money into DeFi. He added that full parity — where pie charts show comparable shares of institutional capital in DeFi and TradFi — might be visible by 2030.
There are early signs that institutions are testing these waters. Stablecoins and tokenized assets have grown in prominence, and DeFi lending protocols are showing strong gains, up 72% year-to-date according to Binance Research.
That growth is helping build a capital base that proponents say will make comparisons with traditional markets more plausible. Still, mainstream use by pension funds, insurers, and global banks requires stronger custody solutions, clearer legal frameworks, and better safeguards against exploits.
For markets, the key indicators will be regulatory rulings in major jurisdictions and measurable inflows from institutional treasuries. For users, what matters most are security, transparency, and a clear chain of accountability when things go wrong.
Nazarov’s forecasts are bold. They reflect a belief among some founders that momentum plus rules will push DeFi from niche to normal.
Whether that belief becomes reality will hinge on actions taken by regulators, the pace at which institutions adopt tokenized strategies, and whether networks can prove they are safe at scale.
