TradFi stands for traditional finance, the established financial system of banks, stock exchanges, fund managers and insurers. DeFi stands for decentralised finance: financial services such as loans, swaps and interest that run without a bank as intermediary, because a program on a blockchain enforces the rules. The core of the difference is whom you trust. With TradFi you trust a supervised institution; with DeFi you trust publicly visible code, and yourself.
The orders of magnitude are far apart. According to data provider DefiLlama, around $71 billion sat in DeFi applications in mid-November 2026, down from almost $121 billion a year earlier. The traditional financial system manages many times that. Even so, the two worlds are converging: fund managers are bringing fund shares onto the blockchain as tokens, and crypto exchanges in Germany operate with a banking licence or MiCA authorisation. For investors, this means that for every crypto investment you should first establish whether you are operating in the supervised part or in open code.
What is TradFi? The traditional financial system of banks, exchanges and custodians
The crypto scene uses TradFi as shorthand for ...
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