DeFi’s Real Bottleneck: Confidentiality, Not Scalability

[bonk]

Despite DeFi’s resurgence — with TVL climbing back from the 2022-2023 crash — the sector still barely taps into global capital. At its peak in December 2021, DeFi’s TVL hit $260 billion, a fraction of the trillions moving daily in traditional finance.

The reason isn’t just regulation, UX or scalability — it’s confidentiality. Every loan, deposit and withdrawal sits on public blockchains. For institutions and high-net-worth players, that level of transparency is a dealbreaker.

New advances in Fully Homomorphic Encryption (FHE) — which allows data to be processed without decrypting it — could remove the biggest hurdle to institutional DeFi adoption.

[EmTeam]

Completely agree—data privacy is the missing layer. Without it, DeFi can’t compete with traditional finance.

[jacson4]

Scalability gets all the attention, but confidentiality will define the next evolution of DeFi platforms.