Maria in Lagos, Nigeria, runs a textile import business. She needs to pay suppliers in Bangladesh, manage payroll for her 15 employees, and get credit to grow her business. Traditional banks offer costly wire transfers that take days, limited credit options, and no transparency on where her money goes during international transfers. DeFi protocols offer better returns and quick transactions, but they don't meet her real-world business needs or fit within the regulations she follows. What Maria and many businesses like hers need is a connection that links the liquidity and innovation of DeFi with the stability and compliance of traditional finance. In this article, I'll explain why this connection is necessary and how Gluwa is building it, starting with an overview and then getting into details. connection that links the liquidity and innovation of DeFi with the stability and compliance of traditional finance The gap between decentralized finance and traditional banking isn't just a technical problem; it's a major barrier in global finance. We need to solve it to allow new capital flows that can help billions of people access financial services, or we'll stay in a world where innovation and inclusion are separate. Otherwise, 4 billion people could be shut out of global capital markets. The divided financial system might lead to a future where DeFi is only for crypto fans, while traditional finance is run by institutions that benefit from inefficiency. This isn't necessarily bad, but it does favor those who profit from the current setup. The Siloed Financial System The financial world today is like two busy highways full of money, new ideas, and opportunities moving very fast. But between these highways, there is a gap that can't be crossed. Traditional finance controls over $400 trillion in global assets but moves money at the speed of 1970s technology.
DeFi protocols have unlocked $200 billion in total value locked, offering 24/7 programmable money, but remain disconnected from real-world economic activity.
Small lenders in emerging markets sit on local knowledge and relationships but lack access to global liquidity pools.
Institutional investors have capital seeking yield but no transparent way to participate in real-world lending opportunities.
Cross-border payments still rely on correspondent banking networks that add days of delay and layers of fees. Traditional finance controls over $400 trillion in global assets but moves money at the speed of 1970s technology. DeFi protocols have unlocked $200 billion in total value locked, offering 24/7 programmable money, but remain disconnected from real-world economic activity. Small lenders in emerging markets sit on local knowledge and relationships but lack access to global liquidity pools. Institutional investors have capital seeking yield but no transparent way to participate in real-world lending opportunities. Cross-border payments still rely on correspondent banking networks that add days of delay and layers of fees. Is the siloed system bad? Is the siloed system bad? The separate financial system works well in its own areas. Traditional finance provides stability and follows rules. DeFi brings new ideas and is easy to access. Remember when sending money abroad meant going to a bank branch? We don't miss that! Remember when sending money abroad meant going to a bank branch? Silos create a challenge for capital allocation: large amounts of money can be used effectively within each system. But when money needs to move between systems, like when a DeFi protocol wants to fund real-world loans or a traditional business wants crypto liquidity, everything falls apart. The systems become inefficient, putting up unnecessary barriers instead of meeting users' real needs, assuming liquidity is always available within their silos, and causing extra friction and cost. Silos create a challenge for capital allocation However, silos themselves aren't bad. Dividing things up has helped both traditional finance and DeFi grow separately. It was a necessary step for the financial system. But now, its usefulness is coming to an end Why Bridge-Building? This is how finance naturally evolves, with capital moving more efficiently. Building bridges helps start innovation. Just like the internet grew by connecting email and the web through shared protocols, the global economy succeeded by linking domestic and international markets smoothly. Building bridges is unavoidable! Have you noticed how capital moves when barriers are taken away? Nassim Taleb talks about what many see as "the most efficient markets" in Antifragile... Antifragile ...the most liquid markets in the world do not have artificial barriers. And they are not liquid in spite of lacking barriers; they are liquid because they lack them. ...the most liquid markets in the world do not have artificial barriers. And they are not liquid in spite of lacking barriers; they are liquid because they lack them. The TCP/IP protocol that runs the internet has always allowed different networks to talk to each other without a central authority controlling everything. Did you get rich by investing in companies that connected separate markets? (I would have if I hadn't missed Amazon's early days of connecting buyers and sellers worldwide.) You can thank bridge-building for that. In simple terms, bridge-building is about using resources wisely. It puts more money in the hands of those who can use it best. Bridge-building is about trusting that markets will work well when barriers are removed, letting money go where it can do the most good. In simple terms, bridge-building is about using resources wisely. The Financial Highway of the Future Unlike separate systems, the bridged financial system is like a busy international airport with lots of connections and easy transfers. There are no barriers. Money moves freely and easily between different systems, taking the best paths. You discover opportunities you didn't know about until they were connected. Innovation occurs wherever it can add the most value. How would it be different? How would it be different? The main technical difference is that financial infrastructure won't be split into separate traditional and crypto networks. Instead, it will be spread across unified protocols that work for both, sometimes in surprisingly connected ways, like stablecoin settlement rails. It's like having separate train systems versus one unified transportation network. Liquidity efficiency will be seen as very important. This basic economic principle should be used widely across all financial platforms. Platforms that want to keep artificial barriers must understand that this approach is exclusive, not inclusive. Liquidity efficiency The architects of the bridged financial system will have to take a hard look at the principles of capital markets, along with the innovations of both TradFi and DeFi, to answer some tough questions. Like, should yield farming be considered investment or speculation? I argue most DeFi yield is unsustainable speculation (And I just pissed off half the crypto people reading this). most DeFi yield is unsustainable speculation And I just pissed off half the crypto people reading this Regulatory Harmony is key as governments, traditional institutions, and DeFi protocols are all threatened by regulatory uncertainty. Networks like Gluwa's Creditcoin or traditional banking APIs would be used to ensure compliance, preventing regulatory arbitrage races to the bottom. Blockchain-based audit trails (which you access once and trust forever) would be used to secure regulatory territory. Regulatory Harmony regulatory arbitrage races to the bottom Unlike traditional banking's opacity (that really, really wants you to trust without verifying) or DeFi's pseudonymity (with its favorite pastime of rug pulls), the bridged financial system would be more of a pure transparency meritocracy. If some small lender in Nigeria had the best risk-adjusted returns on the planet, global capital would be a lot more likely to find them than remain trapped in low-yield traditional products. transparency meritocracy What does the bridged financial system need… Identity Verification - As both systems mature, it's important that unified platforms validate and identify legitimate participants, transactions, and opportunities.
Regulatory Compliance - Keeps capital safe and legal. It's crucial to maintain compliance standards when capital flows between TradFi and DeFi, across jurisdictions, governments, institutions, and, of course, individual users. In the bridged system, this compliance would be built into the infrastructure, not bolted on afterward.
Transparent Pricing - This is a cornerstone as it plays an absolutely crucial role in ensuring efficient capital allocation in a world where no single system controls the flow of money. The aim would be to make every cross-system transaction transparently priced.
Programmable Settlement - Don't you wish international payments settled in seconds? Slow settlement times would drop by 95%. A connected financial system would use programmable settlement methods to cut down on delays, counterparty risk, and operational costs. On blockchain platforms, settling transactions, like transferring value, is done by smart contracts and takes just minutes. Identity Verification - As both systems mature, it's important that unified platforms validate and identify legitimate participants, transactions, and opportunities. Identity Verification Regulatory Compliance - Keeps capital safe and legal. It's crucial to maintain compliance standards when capital flows between TradFi and DeFi, across jurisdictions, governments, institutions, and, of course, individual users. In the bridged system, this compliance would be built into the infrastructure, not bolted on afterward. Regulatory Compliance Transparent Pricing - This is a cornerstone as it plays an absolutely crucial role in ensuring efficient capital allocation in a world where no single system controls the flow of money. The aim would be to make every cross-system transaction transparently priced. Transparent Pricing Programmable Settlement - Don't you wish international payments settled in seconds? Slow settlement times would drop by 95%. A connected financial system would use programmable settlement methods to cut down on delays, counterparty risk, and operational costs. On blockchain platforms, settling transactions, like transferring value, is done by smart contracts and takes just minutes. Programmable Settlement Don't you wish international payments settled in seconds? The bridged financial system would require sophistication and education on behalf of users. bridged financial system would require sophistication and education on behalf of users A connected financial world would be more like a highway system in a developing country, where infrastructure sometimes has gaps and you need to know alternative routes. You need to understand the terrain! There would need to be educational onboarding of capital allocators… There would need to be educational onboarding of capital allocators In the bridged system, we would all have to accept occasional volatility and technical complexity.
Financial literacy education would be encouraged. Wild yield promises would be met with: "What is your evidence for sustainability?"
The culture creators of the bridged financial system would need to lead with transparency. The flip side of innovation is that we all need to practice due diligence in evaluating new opportunities.
The siloed system offers certain protections that sometimes help. The bridged system might be more dangerous for hopelessly naive investors. We'd need to educate people about things like smart contract risks, for example. Don't put your life savings into an unaudited DeFi protocol run by anonymous developers. In the bridged system, we would all have to accept occasional volatility and technical complexity. Financial literacy education would be encouraged. Wild yield promises would be met with: "What is your evidence for sustainability?" The culture creators of the bridged financial system would need to lead with transparency. The flip side of innovation is that we all need to practice due diligence in evaluating new opportunities. The siloed system offers certain protections that sometimes help. The bridged system might be more dangerous for hopelessly naive investors. We'd need to educate people about things like smart contract risks, for example. Don't put your life savings into an unaudited DeFi protocol run by anonymous developers. smart contract risks Don't put your life savings into an unaudited DeFi protocol run by anonymous developers. Gluwa: Building the Bridge This is a platform that combines traditional emerging market expertise with DeFi innovation to create real-world lending opportunities. Since 2014, when traditional banks were ignoring small businesses in emerging markets, Gluwa started building infrastructure that connects global capital to local lending opportunities. Their Creditcoin blockchain has recorded over 3 million real-world loans, creating an immutable credit history that traditional credit bureaus could never match. Yeah, transparent credit history. Yeah, transparent credit history Gluwa's Three-Layer Approach Gluwa's Three-Layer Approach APIs for Fintechs - Gluwa provides the technical infrastructure that lets traditional financial institutions access DeFi liquidity pools without having to understand blockchain complexity. Their APIs handle the translation between traditional banking protocols and DeFi smart contracts. APIs for Fintechs Stablecoins as Settlement Rails - Instead of slow correspondent banking, Gluwa uses stablecoins to move value across borders instantly. A business in Kenya can receive payment from a customer in Germany, settled in USDC, without touching the traditional banking system until the final conversion to local currency. Stablecoins as Settlement Rails Creditcoin as Trust Layer - Every loan, every repayment, every default gets recorded on Creditcoin's blockchain. This creates a global credit infrastructure that works across borders and systems, giving lenders confidence and borrowers access to capital based on actual performance, not just geography or connections. Creditcoin as Trust Layer You might think that bridged financial platforms would be dominated by speculation and regulatory arbitrage; well, you should go look at Gluwa's loan performance data. You'll find real businesses getting real capital to solve real problems. People are surprisingly responsible when given access to transparent, fairly-priced capital. Real Use Cases Real Use Cases Small Lenders Accessing Global Liquidity - A microfinance institution in Nigeria can tap into DeFi lending pools to fund more loans, while global investors can earn yield from real economic activity instead of speculative trading. Small Lenders Accessing Global Liquidity Traditional Investors in Real-World Loans - Pension funds and insurance companies can participate in emerging market lending through Gluwa's platform, getting exposure to higher yields while maintaining regulatory compliance through proper documentation and reporting. Traditional Investors in Real-World Loans Cross-Border Business Operations - A textile importer like Maria can use stablecoins for supplier payments (instant, cheap) while accessing traditional credit lines for working capital (regulated, established). Cross-Border Business Operations The Obstacle The greatest obstacle to bridged finance isn't hard to name: regulatory uncertainty. It is to regulators what the internet was to telecommunications monopolies. The greatest obstacle to bridged finance isn't hard to name: regulatory uncertainty Innovation is a big problem for regulators who prefer predictable, controllable systems.
Regulators can shut down bridges between TradFi and DeFi with a single policy change.
Traditional finance pays billions in compliance costs and lobbying fees. Will DeFi protocols? They'll be lucky to afford a lawyer! Innovation is a big problem for regulators who prefer predictable, controllable systems. Regulators can shut down bridges between TradFi and DeFi with a single policy change. Traditional finance pays billions in compliance costs and lobbying fees. Will DeFi protocols? They'll be lucky to afford a lawyer! They'll be lucky to afford a lawyer! However, regulators are slowly recognizing that innovation serves their constituents, and they're starting to create frameworks rather than just barriers. How do we address this obstacle? With compliance, I'd say. Make bridged finance look legitimate. Make it transparent. Auditable. Regulatory-friendly. How do we address this obstacle? With compliance legitimate Some economists argue that regulatory clarity played a not-insignificant role in the growth of traditional capital markets. Clear rules become a competitive advantage among serious players. If you want to build the financial infrastructure of the future, you need to work with regulators, not against them. I won't belabor this point because if you have to explain legitimacy, you're probably not legitimate. legitimacy The Future of Finance Gluwa as Blueprint Gluwa as Blueprint Gluwa represents what the convergence of TradFi and DeFi looks like when done right: Real-world utility, not speculation
Regulatory compliance built in, not bolted on
Transparent operations that benefit all participants
Technology that serves human needs, not the other way around Real-world utility, not speculation Regulatory compliance built in, not bolted on Transparent operations that benefit all participants Technology that serves human needs, not the other way around The future isn't about DeFi replacing traditional finance or vice versa. It's about building infrastructure that lets capital flow to where it can do the most good, regardless of which system it starts in. Making Capital Borderless, Cheap, and Transparent Making Capital Borderless, Cheap, and Transparent When a small business in Lagos can use the same global capital markets as a Fortune 500 company, when sending money across borders costs just a few cents instead of a percentage, and when credit decisions are based on real performance instead of location, that's when we'll know the bridge is complete. The Highway Ahead My friend Maria's textile business In Maria's collection of business papers, there are many wire transfer receipts—those costly, slow payments that helped her grow. At the end of her latest financial report, after using Gluwa's platform for payments and credit, she wrote one word... Efficient Efficient But that's a word the builders of the bridged financial system can never write as it will be an endless endeavor, as limitless as human economic potential itself.

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

This story contains AI-generated text. The author has used AI either for research, to generate outlines, or write the text itself. 

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Bridging TradFi and DeFi: How Gluwa Creates a Two-Way Highway for Global Capital

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