Decentralized finance (DeFi) is undergoing a strategic shift towards ‘minimum viable decentralization’ (MVD), aiming to overcome critical performance bottlenecks and build sufficient trust to compete effectively with traditional finance (TradFi).
The move is driven by existing limitations in core DeFi infrastructure, notably Ethereum’s 12-15 second block times and the significant problem of Maximal Extractable Value (MEV). These issues frequently push users towards centralized exchanges perceived as offering better speed and reliability.
MVD proposes a pragmatic balance, prioritizing key performance metrics while maintaining core decentralization principles. Key targets include sub-100 millisecond block times, near-instant finality on transactions, and optimized validator sets for faster consensus.
This approach is demonstrated by platforms like Hyperliquid and Aevo, particularly within the rapidly growing decentralized derivatives market. Projections indicate this sector could surpass $351 trillion by 2031, and MVD is seen as crucial for DeFi platforms to achieve the necessary scale and execution speed to capture this growth.
Proponents argue that adopting MVD is essential for DeFi to evolve beyond its experimental phase into practical, everyday usability. By improving execution speed and enhancing market integrity through MEV mitigation, MVD could significantly boost institutional adoption and overall competitiveness against TradFi infrastructures.
The shift represents an effort to harness the core benefits of decentralization while meeting the high-performance demands required for mainstream financial activity.