Binance CEO Changpeng “CZ” Zhao anticipates that decentralized finance (DeFi) will surpass centralized finance (CeFi) in the upcoming bull run. In a recent live X Spaces event titled “CZ AMA”, Zhao emphasized his belief that a more decentralized industry will lead to better outcomes. He stated that DeFi currently represents approximately 5% to 10% of CeFi trading volumes, which he considers significant. He further suggested that in the next bull run, DeFi could potentially overtake CeFi in terms of size.
This prediction comes in the wake of legal action taken by the United States Securities and Exchange Commission (SEC) against prominent centralized exchanges Coinbase and Binance. Following the lawsuits, there was a 444% surge in trading volume on the top three decentralized exchanges (DEXs) within 48 hours. As of now, the total 24-hour trading volume on DEXs is $722,776,226.
Zhao also expressed his positive perspective on the recent dismissal of a class-action lawsuit against the decentralized protocol Uniswap. He commended the court’s decision as “extremely reasonable, logical and clear.” The lawsuit, brought by individuals who claimed to have lost money due to scam tokens on Uniswap, was dismissed due to the inability to identify the scammers. The judge’s ruling highlighted the importance of regulatory certainty in ensuring investor protection.
During the X Spaces session, a participant highlighted the judge’s decision that developers cannot be held liable for misuse of a DeFi platform. This was seen as positive news for DeFi builders, and Zhao agreed, emphasizing the importance of industry protection. He asserted that developers writing code should be considered free speech and that this aspect of development is highly advantageous.
Recent data suggests a shift in venture capitalist investment from CeFi projects to DeFi projects. CoinGecko reported that digital asset investment firms invested $2.7 billion in DeFi projects in 2022, a significant increase of 190% from the previous year. In contrast, investments in CeFi projects dropped by 73% to $4.3 billion during the same period. This shift indicates the growing potential of DeFi as the new high-growth area in the crypto industry, as CeFi may have reached a saturation point.
This trend towards DeFi aligns with CZ’s belief in its future dominance over CeFi. As the industry becomes more decentralized, DeFi’s prominence is expected to increase further, potentially reshaping the financial landscape in the next bull run.
In conclusion, Binance CEO CZ Zhao predicts a bright future for decentralized finance, envisioning its potential to surpass centralized finance in the next bull run. The recent surge in DeFi trading volumes, the dismissal of the Uniswap lawsuit, and the shift in venture capitalist investments signify the growing influence and confidence in the DeFi sector. As the industry continues to evolve, the dominance of DeFi may become a reality sooner than expected.
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