Finance needs speed and brakes.

Writing by: Prathik Desai

Translation: Block unicorn

Small annoyances can sometimes save lives.

Think about that reminder sound in your car that keeps telling you to buckle your seatbelt. That persistent alert can be annoying, and many people have complained about it. But it’s precisely this continuous reminder that has prompted countless people to buckle up. What’s the result? According to the Insurance Institute for Highway Safety (IIHS), in the U.S. alone, these ongoing alerts save approximately 1,500 lives each year. Truly a lifesaver.

Small disturbances can sometimes help you save a lot of money.

A frustrating phenomenon in modern banking is: when you think you’ve completed a wire transfer, you suddenly get interrupted. You’ve entered the account number, routing number, and recipient’s name. At this point, the bank doesn’t immediately complete the transfer but pauses to verify whether the recipient’s name matches the account information. This extra step, a single click, disrupts the rhythm. From the product team’s perspective, it’s like friction. However, this pause has become one of the most effective security measures in global payments.

The “Confirmation of Payee” service provided by Pay.UK enables individuals and institutions in the UK to make transfers, now covering over 99% of all payment channels. The volume of verifications has grown from 14,000 per month in June 2020 to over 70 million per month by July 2025. It has reduced “incorrect account” transactions by 59% and cut end-user financial losses by 20% to 40%.

For over a decade, the financial industry has been striving for seamless transactions. We’ve seen efforts like “touch once,” “slide once,” “click to trade,” trying to make funds flow silently in the background. The industry’s instinct is often to see every pause as a flaw. As it develops, it becomes increasingly obsessed with seamless integration. But this evolution also repeatedly reminds us that some so-called “frictions” are actually necessary brakes to prevent system collapse.

Traditional finance’s need for brakes

Today, the financial industry embeds these restrictions into every new infrastructure it builds.

In the U.S., licensed brokers must implement risk controls to limit their financial exposure and ensure regulatory compliance. When the SEC adopted Rule 15c3-5, it stated that the rule aims to address risks from automated high-frequency trading and prevent unrestricted access to exchanges.

The reason the financial sector keeps revisiting this lesson is simple: when brakes fail, the damage often exceeds what institutions can withstand and recover from.

On Black Monday in 1987, the Dow Jones plummeted 22% in a single day. The Brady Commission recommended adding a “circuit breaker” pause button, stipulating that when the market drops by a certain percentage, trading should halt for 15 minutes. Without these limits, Black Monday wiped out $1.7 trillion in global market value in one day. Adjusted for inflation, that loss exceeds $4.7 trillion today—more than Germany’s current GDP, the world’s third-largest economy.

These brakes made it clear that sometimes the only way to keep moving forward is to temporarily stop the machine. In other cases, a brief pause can resolve issues.

In August 2012, Knight Capital Group experienced a software glitch that caused its computers to buy and sell millions of shares within just 45 minutes. The malfunction resulted in a loss of $440 million in less than an hour, nearly bankrupting the market maker. Knight Capital had optimized its system for speed, which is crucial in trading. But an uncontrolled, brake-less system—even the fastest—can crash instantly. The lesson? The faster the system, the more important the braking mechanism.

Retail finance also faces many issues.

For years, brokers have worked to make high-risk products easy to operate to grow retail users. Their persistence ultimately eroded trust. In 2021, FINRA disciplined Robinhood, noting that the company failed to conduct proper due diligence before approving clients for options trading and heavily relied on unregulated automated “approval robots.” The non-profit self-regulatory organization claimed Robinhood’s system approved clients based on inconsistent or illogical information. FINRA stated that the system allowed applicants with clearly questionable risk profiles to be approved.

Robinhood’s system was optimized for rapid processing to avoid making potential clients wait. But what it lacked was a meaningful pause between curiosity and safety. Fast speed, no brakes.

The peculiar case of cryptocurrency

Recently, the Aave-CoW incident in the crypto space has elevated the need for braking mechanisms to a new level.

On March 12, 2025, a user executed a $50 million swap via CoW Swap—a decentralized exchange (DEX) aggregator designed to protect users from front-running by bots. The transaction was integrated into the Aave DeFi protocol’s frontend. Due to insufficient liquidity, the user only received tokens worth $36,930, while paying $50 million.

Although Aave explained in its post-incident analysis that the user ignored clear high-price impact warnings, its founder and CEO, Stani Kulechov, posted on X that the Aave team “will explore how to improve these safeguards.”

Setting aside terminology, it’s obvious: the fast interface allowed a disastrous trade to go too far before the system could react. While some might question the user’s judgment or their ignorance of warnings, viewing this as an isolated incident is both convenient and counterproductive for the development of new financial infrastructure like blockchain.

To prevent similar incidents, the solution lies in building smarter execution layers. Some DeFi trading protocols are already moving in this direction.

For example, Definitive.Fi believes that large on-chain trades should not simply choose the technically feasible path. They should be simulated before submission, tested against real market conditions, split into smaller parts if necessary, and routed through broader liquidity pools. Therefore, a good trading system should not only verify whether it can execute a trade but also check for the optimal route to complete the order.

For any emerging infrastructure, trust and additional security are not optional features—especially in finance. A product that makes trading, lending, or transferring funds easy and fast can promote rapid growth, but failures can have serious consequences. All the traditional financial cases above show this pattern: systems try to minimize visible friction points—even necessary restrictions—masking complexity and relying on smooth operation to gain consumer trust.

But trust in finance is rarely built this way. It often comes from financial institutions recognizing critical moments for intervention and taking some unpleasant but necessary measures to prevent harm. Pay.UK’s Confirmation of Payee is such an example. While repeatedly asking users to verify bank account names is unpleasant, it can prevent costly and irreversible errors.

Stani Kulechov of Aave understands this well. That’s why he admits that clients don’t always understand the flow of orders, who the payer is, or whether better trading channels exist. In emerging sectors like crypto and blockchain, this understanding is especially vital because few users grasp the technical process behind transactions or the consequences of each click. Recognizing pain points and addressing them is crucial to building consumer trust.

The tricky part is that the line between a good braking mechanism and random inconvenience or friction is thin. A good brake doesn’t slow down completely but applies gentle resistance at precise moments. For example, in the Aave-CoW incident, a good braking mechanism can be imagined as a rational check—scanning more trading venues before routing, preventing malicious order intent, simulating outcomes before execution, and splitting large trades to avoid penalties. These mechanisms are key to ensuring that financial infrastructure remains trustworthy.

This distinction is important because many pain points in finance remain unresolved—tedious paperwork, slow compliance processes, hidden fees disguised as part of procedures, and cumbersome registration processes that scare off new users.

None of these should be justified. Setting “brakes” isn’t about designing uglier products or adding pop-up ads; it’s about creating pause points when users are about to make irreversible decisions based on incomplete information. Especially when handling large orders in low-demand markets, selling high-risk products, exploring new payment methods, or performing one-click operations (where speed is less critical and risk is immediate).

There are also business insights here.

The finance industry often says that safeguards are only necessary after product-market fit is achieved. That’s a misconception. In finance, safeguards are an integral part of product-market fit. When implemented properly, they don’t hinder progress. The Pay.UK example further confirms that “Confirmation of Payee” isn’t just a fraud prevention feature but a practical service customers expect when using the system.

Emerging financial infrastructures like blockchain aim to earn trust and withstand errors, scandals, and market pressures—just like traditional finance. But it’s not easy. They must proactively think about how to earn trust before gaining users, because only trust attracts users. Conversely, trust isn’t guaranteed just by technology.

If blockchain adopts strategic braking measures, its speed could surpass any other financial infrastructure.