Binance CEO Changpeng Zhao believes that decentralized finance (DeFi) has the potential to outshine centralized finance (CeFi) in terms of trading volumes during the upcoming bull run. He expressed this belief during a live X Spaces event on September 1.
Zhao emphasized the importance of decentralization, stating, “I think the more decentralized the industry becomes, the better.” He suggested that it may not be long before DeFi surpasses CeFi trading volumes, which currently stand at around 5% to 10% of CeFi volumes.
“DeFi is the future; the volume is somewhere between 5% to 10% of CeFi volumes, which is not small right […] the next bull run may very well make DeFi bigger than CeFi.”
This prediction aligns with recent developments in the cryptocurrency market. Following legal actions by the United States Securities and Exchange Commission (SEC) against major centralized exchanges Coinbase and Binance, the trading volume of the top three decentralized exchanges (DEXs) increased by 444% in just 48 hours. The current 24-hour trading volume on DEXs stands at $722,776,226.
Zhao also commented on the recent dismissal of a class-action lawsuit against decentralized protocol Uniswap, describing it as a positive and logical decision that emphasizes the importance of regulatory clarity. The judge presiding over the case found no grounds to proceed with the lawsuit against Uniswap, affirming the alignment of its operations with financial regulations.
During the X Spaces session, Zhao echoed a judge’s decision that developers cannot be held liable for the misuse of DeFi platforms. He emphasized the importance of protecting developers, considering writing code as a form of free speech that should be safeguarded.
“Developers writing code, that code is free speech. So the development is really good.”
Recent data indicates a shift in investment patterns, with venture capitalists reallocating funds from CeFi projects to invest in the rapidly growing DeFi sector. In 2022, digital asset investment firms invested $2.7 billion in DeFi projects, marking a 190% increase compared to 2021. Conversely, investments in CeFi projects decreased by 73% to $4.3 billion during the same period.
It appears that DeFi is emerging as the new high-growth area in the crypto industry, while CeFi may have reached a saturation point.
Meanwhile, Binance has urged its users to convert their Binance USD (BUSD) tokens to other stablecoins before February 2024. The exchange encourages trading or converting BUSD balances for First Digital USD (FDUSD), a stablecoin launched by Hong Kong-based trust company First Digital Group. However, it is important to note that the market cap of BUSD has significantly decreased following regulatory actions. Its market cap has plummeted by over 80% since the start of the year, dropping from $16.13 billion on February 9 to its current value of $3.1 billion.
