Binance CEO CZ forecasts DeFi outgrowing CeFi in the next bull run

September 4, 2023 Alex Rustok

Binance CEO Changpeng “CZ” Zhao predicts that decentralized finance (DeFi) has the potential to surpass centralized finance (CeFi) in the next bull run.

During a Sept. 1 live X Spaces (formerly Twitter Spaces), titled CZ AMA, Zhao shared his thoughts on the future of DeFi. “I think the more decentralized the industry becomes, the better,” he declared, adding that it may not be long before it takes over CeFi trading 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.“

On June 9, Cointelegraph reported that following legal action by the United States Securities and Exchange Commission (SEC) against centralized exchanges Coinbase and Binance, the median trading volume on the top three decentralized exchanges (DEXs) surged by 444% in 48 hours. At the time of publication, the total 24-hour trading volume on DEXs is $722,776,226.

CZ further shared his perspective on the recent dismissal of the lawsuit against the decentralized protocol Uniswap. “The Uniswap thing was extremely positive, extremely reasonable, logical and clear. That is very good,” he declared.

On Aug. 30, a U.S. federal court dismissed a class-action lawsuit against Uniswap and its CEO, foundation and venture capital backers, which was brought by plaintiffs who claimed they lost money due to scam tokens on the decentralized cryptocurrency exchange.

The judge rejected the case because neither side could identify the scammers and emphasized that regulatory uncertainty leads to reduced 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.“

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During the session, an X user recalled the judge’s decision that developers cannot be liable for misuse of a DeFi platform, which the user believes is positive news for DeFi builders. CZ agreed that more industry protection is a positive development. 

“Developers writing code, that code is free speech. So the development is really good,” CZ stated.

Recent data indicates that venture capitalists are reallocating funds from CeFi projects to boost their investments in DeFi projects. 

According to a March 1 report from CoinGecko, digital asset investment firms invested $2.7 billion in DeFi projects in 2022, a 190% increase from 2021, while investments in CeFi projects dropped by 73% to $4.3 billion during the same year.

This “Potentially points to DeFi as the new high growth area for the crypto industry,” the report stated, adding that the decrease in funding toward CeFi might stem from the sector reaching a saturation point.

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