Changpeng Zhao, CEO of Binance, anticipates that decentralized finance (DeFi) might eclipse centralized finance (CeFi) in the impending market surge.
In a live X Spaces event held on September 1, Zhao conveyed his sentiment that DeFi holds the capability to exceed CeFi in trading volumes.
Zhao commented, “A more decentralized industry is the ideal direction.” He highlighted that, at present, DeFi constitutes roughly 5% to 10% of CeFi trading volumes. He further added, “DeFi represents the upcoming trend; given that it already holds a decent portion of CeFi volumes… the forthcoming market uptrend might very well position DeFi ahead of CeFi.”
Recent trends in the cryptocurrency market seem to support Changpeng Zhao’s forecast.
After the U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against major centralized platforms like Coinbase and Binance, there was a dramatic surge in the trading activity of the leading three decentralized exchanges (DEXs) — a whopping 444% jump within just 48 hours.
Currently, DEXs are recording a 24-hour trading volume of $722,776,226.
Additionally, Zhao weighed in on the recent decision to dismiss a collective lawsuit targeting the decentralized protocol, Uniswap.
Zhao viewed the dismissal as both encouraging and rational, underscoring the necessity for clear regulatory guidelines.
It was on August 30 that the overseeing judge declared a lack of substantial basis to move forward with the lawsuit targeting Uniswap.
This decision culminated a prolonged legal journey, tracing back to April 2021, during which Uniswap’s practices and their compliance with financial rules were thoroughly examined.
Developers Cannot be Held Reliable for Misuse of DeFi Projects
In the X Spaces discussion, a participant brought up a judge’s ruling which posited that developers shouldn’t be held accountable for any misappropriation of DeFi platforms.
Concurring with this view, Zhao highlighted the imperative to shield developers, underscoring that crafting code equates to an act of free expression deserving protection. “The very act of developers scripting code — that’s an embodiment of free speech. This progression is indeed commendable,” CZ articulated.
Emerging statistics hint at an evolving trend in investment dynamics. It seems venture capitalists are pivoting, redirecting resources from CeFi initiatives to capitalize on the burgeoning DeFi landscape.
A CoinGecko report from March spotlighted that in 2022, digital asset investment enterprises poured $2.7 billion into DeFi endeavors, representing a staggering 190% surge relative to the previous year.
Contrastingly, financial injections into CeFi ventures plummeted by 73%, settling at $4.3 billion during that identical timeframe.
The analysis indicates a shift in the crypto landscape, with DeFi positioning itself as the burgeoning frontier, while CeFi appears to be nearing its growth ceiling.
In a recent development, Binance advised its clientele to transition their holdings in Binance USD (BUSD) to alternative stablecoins by February 2024.
Specifically, the platform recommended its users to swap or trade their BUSD assets for First Digital USD (FDUSD) — a new stablecoin rolled out in June by the Hong Kong-based entity, First Digital Group. Interestingly, Binance was the first exchange to list this new stablecoin.
A critical observation is the pronounced decline in BUSD’s market valuation, primarily attributed to heightened regulatory scrutiny.
From the beginning of the year, there’s been a drastic depreciation in BUSD’s market cap, with a staggering 80% decline. It dwindled from a peak of $16.13 billion on February 9 to its present standing at $3.1 billion.
