Can you provide a decision rule that distinguishes financial services from financial engineering?

I do not feel as confident as you seem that the group of things called “crypto” will not be useful for financial services.

My definition: Financial engineering is the quantitative isolation and amplification of financial risk/reward, usually through leveraged/synthetic derivative products. There's no perfect source, but you can see similar definitions here [0] [1] [2]

To give you a crypto example of this, Aave is financial engineering, because it allows users to make a bet that they can execute high-volume short-duration trades that yield more than Aave lending fees.

In terms of what is financial services, my definition is: Any action taken that allows capital holders to better deploy their capital into the real (read: goods and services) economy. Again, no prefect source, but [3] [4] [5]

Again the key nuance here is financial services primarily focus on supporting the real economy, while financial engineering is primarily focused on risk/reward

And to be frank, I would absolutely love it if cryptocurrencies supported the real economy in literally any way shape or form. I would get "BTC4Life" tattooed on my forehead, I would dedicate my life to working for the innovators in the space, but unless you've got some secret, I don't think you can give me an example of literally anything cryptocurrency does to support the real economy that a centralized solution couldn't also do.

[0] https://en.wikipedia.org/wiki/Financial_engineering

[1] https://www.investopedia.com/terms/f/financialengineering.as....

[2] https://www.iaqf.org/what-is-financial-engineering

[3] https://www.imf.org/external/pubs/ft/fandd/2011/03/basics.ht...

[4] https://www.cisa.gov/financial-services-sector

[5] https://www.law.cornell.edu/definitions/uscode.php?width=840...

Strong parallels between your definition with “isolation” and that offered by freemint in terms of decomposition into elements.

The nuance makes sense on its face. Although I don’t trust my own judgement of what impacts the real economy and what is just shuffling of decomposed elements of risk and reward.