# The DeFi Disconnect

While DeFi offers instant settlement, it has historically lacked connectivity to the real economy:

* **Circular Yield:** Most DeFi yields are recursive (governance tokens farming other governance tokens), leading to volatility.
* **Collateral Limitations:** Borrowing is typically limited to crypto-native assets (ETH/BTC), excluding the massive value of real-world receivables.
* **Compliance Barriers:** Institutional capital cannot flow into permissionless pools without KYC/AML guardrails.


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