DeFi to Outperform CeFi in Upcoming Market Rally

Binance CEO Changpeng ‘CZ’ Zhao made a confident assertion last July that decentralized finance, commonly referred to as DeFi, is poised to rise above centralized finance, or CeFi, in terms of prominence and significance within the financial landscape. According to his forward-looking perspective, this transformative shift is expected to materialize over the course of the next six years.

Zhao pointed out a recent rise in institutional interest in cryptocurrencies, seeing it as a validation of the industry and its technology. He believes that if even a small portion of the trillions of dollars controlled by institutional investors in the equity market were invested in crypto assets, it would significantly boost the cryptocurrency market’s growth.

Binance Boss Upbeat About DeFi Domination

Even after two months have passed since his initial assessment, his conviction remains unwavering: he firmly believes that the realm of DeFi is on the brink of surpassing centralized finance in both prominence and significance within the broader financial landscape. This assertion reflects his steadfast belief in the transformative potential of DeFi, envisioning it as a force that will reshape how we perceive and engage with financial systems.

Live now.https://t.co/e4bVfhKwRB

— CZ 🔶 Binance (@cz_binance) September 1, 2023

In a live X Spaces event on September 1, known as CZ AMA, the Binance boss expressed his views regarding the future of DeFi. He said he believes that as the industry decentralizes, it will see improvements, and he also hinted at the possibility of DeFi overtaking CeFi in trading volumes in the near future.

“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,” CZ said.

CZ’s claim was based on the most recent accomplishments of the industry. In the initial two quarters of 2023, the decentralized exchange (DEX) Uniswap, which holds the distinction of being the largest and most widely utilized DEX, exhibited superior performance in terms of spot trade volumes when compared to the centralized industry giant Coinbase.

Bitcoin still stuck in the $25K level. Chart: TradingView.com

According to DeFiLlama, the decentralized exchanges have reported a trading volume of approximately $12 billion within the past week. The proportion of DEX share in the overall market for spot trading of cryptocurrencies amounted to nearly 18%.

Volumes Are Up 

The median trading volume on the top three decentralized exchanges (DEX) reportedly increased by 444% over a 48-hour period following the United States Securities and Exchange Commission’s (SEC) legal action against centralized exchanges Coinbase and Binance on June 9. The 24-hour trading volume on DEXs is $722.7 million as of the time of publication.

Meanwhile, Zhao reaffirmed the exchange’s commitment to compliance in response to the exchange’s recent regulatory challenges in a number of countries. Despite regulatory investigations and legal actions in countries such as Australia, the United States, Canada, and Europe, Binance is prepared to comply with regulations, according to Zhao.

In addition to anticipating the dominance of decentralized finance (DeFi) over centralized finance (CeFi) in the forthcoming bullish market, CZ also articulated the notion that cryptocurrency adoption should be embraced universally, albeit with varying degrees of urgency across different nations.

Featured image from OKX Exchange