Finance Needs Speed and Brakes

Small annoyances can sometimes save lives.

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

A small inconvenience 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. But instead of immediately completing the transfer, the bank pauses to verify whether the recipient’s name matches the account information. This extra step adds a click, disrupting the flow. As product teams might say, it’s like friction. Yet, this pause has become one of the most effective methods of payment security worldwide.

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 “account error” 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 “tap once,” “swipe 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 seamlessness. But this evolution also repeatedly reminds us that some so-called “frictions” are actually necessary brakes to prevent system collapse.

The Need for Brakes in Traditional Finance

Today, these controls are embedded into every new infrastructure the financial industry builds.

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

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

In 1987, Black Monday, the Dow plunged 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’s over $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 pace 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 in just 45 minutes. The malfunction resulted in a loss of $440 million, nearly driving the market maker to bankruptcy. Knight 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 critical 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 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, avoiding long waits for potential clients. 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 crypto 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 bots. The trade was integrated into the Aave DeFi protocol’s frontend. Due to insufficient liquidity, the user ended up receiving tokens worth only $36,930, while paying $50 million.

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

Setting aside terminology, it’s clear: the fast interface allowed a disastrous trade to go too far before the system could react. Some might question the user’s judgment or ignorance of warnings, but if viewed as an isolated incident, it’s both convenient and counterproductive for the development of new financial infrastructure like blockchain.

To prevent repeats, the solution lies in building smarter execution layers. Some DeFi protocols are already heading in this direction.

For example, Definitive.Fi believes large on-chain trades shouldn’t just pick the technically feasible route. They should be simulated before submission, tested against real market conditions, split into smaller parts if necessary, and routed through broader liquidity pools. A good trading system should not only verify whether it can execute a trade but also check for the best possible route.

For any emerging infrastructure, trust and extra security aren’t optional features—they are essential. A product that makes trading, lending, or transferring funds easy and fast helps it grow quickly, but failures can have severe consequences. All the traditional financial cases above follow this pattern: systems try to minimize visible friction points—even necessary restrictions—masking complexity and hoping a smooth experience will earn consumer trust.

But trust in finance rarely builds this way. It often comes from 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 isn’t pleasant, it can prevent costly, 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, as few users grasp the technical process behind transactions or the consequences of each click. Recognizing pain points and addressing them is crucial for building consumer trust.

The tricky part is that brakes are only a thin line away from random inconvenience and friction. Good brakes don’t slow down entirely but apply gentle resistance with precise timing. Take the Aave-CoW incident: a good brake mechanism can be imagined as a rationality 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 the trustworthiness of financial infrastructure.

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

None of these should be excused. Setting “brakes” isn’t about designing uglier products or adding pop-ups; it’s about creating pauses 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 isn’t the priority but risk is immediate).

There are also business lessons here.

The finance industry often says that safeguards are only necessary after product-market fit. That’s a misconception. In finance, safeguards are an integral part of product-market fit. When implemented properly, they don’t hinder progress. Pay.UK’s example further confirms that “Confirmation of Payee” isn’t just a fraud prevention feature; it’s 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 that’s not easy. They must proactively think about how to earn trust before gaining users, because only trust naturally attracts users. Conversely, trust isn’t guaranteed.

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