Binance’s CEO, Changpeng “CZ” Zhao, anticipates that decentralized finance (DeFi) could outpace centralized finance (CeFi) during the upcoming bullish market cycle.
In a live X Spaces event on September 1st, titled “CZ AMA,” Zhao expressed his views on the future of DeFi. He stated, “I believe that the greater the degree of decentralization in the industry, the more advantageous it is.” He further suggested that it might not be long before DeFi surpasses CeFi in terms of trading volumes.
On June 9th, Cointelegraph reported that, following legal actions taken by the United States Securities and Exchange Commission (SEC) against centralized exchanges Coinbase and Binance, there was a remarkable 444% surge in the median trading volume across the top three decentralized exchanges (DEXs) within a span of just 48 hours. As of the time of this report, the total 24-hour trading volume on DEXs stands at an impressive $722,776,226.
CZ also shared his insights on the recent dismissal of a lawsuit against the decentralized protocol Uniswap. He praised the outcome, saying, “The Uniswap situation was highly positive, extremely rational, logical, and transparent. That’s a very favorable development.”
On August 30th, a U.S. federal court dismissed a class-action lawsuit against Uniswap, its CEO, foundation, and venture capital supporters. The lawsuit had been filed by plaintiffs who claimed they incurred losses due to fraudulent tokens on the decentralized cryptocurrency exchange. The judge dismissed the case on the grounds that neither party could identify the culprits and highlighted the fact that regulatory uncertainty undermines investor protection:
“They now sue the Uniswap Defendants […] hoping that this Court might overlook the fact that the current state of cryptocurrency regulation leaves them without recourse.”
During the discussion, a participant brought up the judge’s decision, asserting that developers cannot be held responsible for the misuse of a DeFi platform. CZ concurred, emphasizing that increased industry protection is a positive development.
Recent data suggests that venture capitalists are shifting their investments from CeFi (Centralized Finance) projects to bolster their stakes in DeFi (Decentralized Finance) projects.
According to a report from CoinGecko dated March 1st, digital asset investment firms poured $2.7 billion into DeFi projects in 2022, marking a remarkable 190% surge from the previous year. Meanwhile, investments in CeFi projects plummeted by 73% to $4.3 billion during the same period.
The report suggests that this trend “potentially indicates that DeFi is emerging as the new high-growth frontier within the crypto industry,” adding that the decline in CeFi funding might be attributed to the sector nearing a saturation point.