Decentralized finance (DeFi) could spark a liquidity race in global financial markets. By enabling peer-to-peer transactions without intermediaries, DeFi platforms offer high-yield opportunities, attracting capital from traditional markets. This shift may drain liquidity from centralized systems, as investors chase better returns in DeFi’s open protocols. However, fragmented liquidity pools and varying platform risks could destabilize markets, creating volatility. Regulatory responses may also intensify, as governments seek to control capital flows. While DeFi enhances access and efficiency, its rapid growth might challenge the stability of legacy financial systems, forcing them to innovate or lose relevance.