What is DeFi (Decentralized Finance)?

The development of the global financial system is facing a historic turning point, where traditional barriers of centralization of power are gradually being replaced by programmable protocols. According to assessments from experts at Tan Phat Digital, Decentralized Finance (DeFi) is no longer an experimental concept, but has grown to become a sustainable infrastructure, redefining the way value is circulated. In essence, DeFi is an open financial ecosystem, built on blockchain technology, allowing for services such as direct peer-to-peer lending, trading and insurance without the need for intermediaries. This operation is based on smart contracts, which help automate financial agreements with outstanding transparency.

The global DeFi market is currently recording steady growth, with a valuation of about 51.22 billion USD in 2025 and expected to increase to 78.49 billion USD by 2030, corresponding to a compound annual growth rate (CAGR) of 8.96%.1

DeFi Finance Archetypes and Infrastructure

The foundation of DeFi is based on five core specifications: decentralization, transparency, equal access, use of smart contracts, and composability. Decentralization ensures users have full control over assets, while composability allows applications to connect with each other like "financial Lego" blocks.

Infrastructure polarization in 2025 shows that Layer 2 (L2) solutions have become the preferred destination due to low cost and high speed. Below is the growth index of the leading L2 networks as of Q4 2025:

• Base Network (Coinbase): Leading the market with 46.58% TVL market share, growing exponentially from 3.1 billion USD to more than 5.6 billion USD.

• Arbitrum: Capturing 30.86% of the market share, maintaining a stable state at 2.8 billion USD.

• Other Layer 2 solutions: Accounted for less than 23% of the market share, tending to decline slightly after incentive programs end.

• Total security value of the entire segment: Reached about 57.82 billion USD, up 53.9% over the same period last year first.

This rise turns DeFi into a platform for mass adoption, where microtransactions become viable with regular gas fees under $0.20.

The Evolution of Popular DeFi Applications

The DeFi ecosystem has now reached product maturity, especially in three key areas:

Lending and Borrowing Markets (Lending Markets)

Protocols such as Aave and Compound continue to hold a mainstay position. The crypto mortgage lending market reached a record high of $73.59 billion at the end of the third quarter of 2025. The prominent trend is the shift to direct lending, which now accounts for more than 80% of the market share. Notably, on-chain lending interest rates have now become more competitive than traditional 30-year residential mortgages in many developed countries.

Decentralized Exchanges (DEX)

Exchanges like Uniswap have evolved from basic AMM models to on-chain Centralized Limit Order Book (CLOB) models like Hyperliquid. DEXs currently contribute approximately 20% of total global spot trading volume, demonstrating the growing preference for asset autonomy.

Stablecoins and the Currency Base Layer

Stablecoins have established their position as the "lifeblood" of the digital world with a circulating supply exceeding $290 billion by the end of 2025. These assets are not only used for trading but have become successful. core treasury management tool for both businesses and individuals.

Impact of Real World Assets (RWA)

Tokenization of tangible assets (RWA) such as bonds, real estate and gold is identified by Tan Phat Digital as the most important trend driving TradFi capital flows into blockchain. The RWA crypto market in Q4 2025 is distributed as follows:

• Private Credit: Reached 16.8 billion USD, recording the fastest growth rate with leading entities such as Apollo and Maple Finance.

• US Government Bonds: Exceeded 8 billion USD, attracting the participation of giants such as BlackRock and Siemens.

• Real estate: Is expanding strongly with a forecast growth rate of 9.55%, focusing on fractional ownership model.

• Total RWA market size: Reaching nearly 29.4 billion USD and expected to reach 30.1 trillion USD by 2034.

Artificial Intelligence (AI) and the DeFAI Era

The intersection of AI and DeFi is creating a user class of autonomous AI agents. It is predicted that by 2026, these agents will perform intent-based transactions through natural language, making DeFi "invisible" and easier to access. AI also plays a key role in automatically rebalancing portfolios to optimize returns.

Security and Decentralized Insurance

Security remains the biggest challenge. In response, the decentralized insurance segment has grown strongly with a scale expected to reach 16.94 billion USD by 2029.2 Platforms such as Nexus Mutual have protected more than 6 billion USD in assets and paid out more than 18 million USD for historical incidents, providing professional risk management solutions for both retail users and institutions.3

Comparing DeFi and CeFi: Convergence CeDeFi

In 2025, the differences between these two models are increasingly obvious but tend to converge in the CeDeFi model:

• About Custody: DeFi allows users to manage assets completely themselves (Self-custody), while CeFi still relies on third parties (Custodial).

• About Transparency: DeFi operates publicly on the blockchain, allowing anyone to audit, as opposed to CeFi's internal database.

• About Interest Rates (Stablecoins):DeFi offers fluctuating interest rates from 2% to 14.11%, while CeFi maintains a more stable 8% to 16% through platforms like Nexo.

• About Risk risk:DeFi's risk lies in source code errors (smart contracts), while CeFi faces the risk of bankruptcy of the managing entity.

DeFi Context and Legal Framework in Vietnam

Vietnam is trying to build a legal framework to encourage blockchain innovation. Important milestones include:

• Digital Technology Industry Law (DTI Law):Officially recognizing cryptocurrency as a legal investment tool from the beginning of 2026.5

• Decree 329/2025/ND-CP:Requiring declaration of transaction purpose when transferring money to Financial Centers to ensure transparency Bach.6

• DeFi 2025 event in Da Nang: On December 20, 2025, the International Scientific Conference on Digital Economy and Financial Technology Innovation (DeFi 2025) was held in Da Nang, gathering nearly 200 experts from 11 countries to discuss the future of fintech and AI in Vietnam Nam.

In the Vietnamese market, Tan Phat Digital is acting as a pioneer in consulting and supporting digital transformation businesses to integrate payment and asset management solutions on the blockchain platform in a safe and compliant manner.

Interest Rate and Risk Trend Analysis

DeFi's risk management model is based on a strict Loan-to-Value (LTV) ratio strict:

This system helps maintain stability through the automatic liquidation mechanism, even when the market fluctuates strong. It is predicted that by 2030, DeFi will become an "invisible infrastructure" layer, helping financial institutions process cross-border payments in minutes instead of days.

In short, DeFi in the period 2025-2030 represents the convergence of technology, artificial intelligence and legality. With the companionship of specialized units such as Tan Phat Digital, individuals and businesses can be more confident in accessing this open, transparent and effective financial ecosystem.