Decentralized Finance Could Eclipse Centralized Finance
Changpeng “CZ” Zhao, the Chief Executive Officer of Binance, envisions a future where the influence of decentralized finance (DeFi) may overshadow that of centralized finance (CeFi). On a recent interactive session on X Spaces (previously Twitter Spaces) named "CZ AMA", Zhao vocalized his perception about the potential evolution of DeFi. "The greater the decentralization of the industry, the more beneficial it will be," stated Zhao confidently, hinting at the possibility of DeFi surpassing CeFi in terms of trading volume.
The Steady Rise of DeFi Trading Volume
As per June 9 report, in the backdrop of SEC's legal proceedings against centralized platforms like Coinbase and Binance, a sharp upturn of 444% was witnessed in the median trading volume of the leading three decentralized exchanges (DEXs) within 48 hours. The total 24-hour trading volume of DEXs currently stands at $722,776,226.
Dismissing Uniswap Lawsuit: a Turning Point?
CZ expanded on his views regarding the recent rejection of the lawsuit against Uniswap, the decentralized protocol. “The judgement pertaining to Uniswap was extremely rational, logical, and positive, which is advantageous,” was Zhao's emphatic response. Back in August, a class-action lawsuit against Uniswap and its associates, including the CEO, was dismissed by a federal court in the United States. The plaintiffs contended they suffered losses due to fraudulent tokens on the decentralized exchange.
Regulation Uncertainty and Investor Protection
The judge scrapped the proceeding, stating the failure of the plaintiff and the defendant to track down the culprits, and stressing the link between regulatory ambiguities and diminished investor safeguards. One of the participants in the X session observed that the ruling, which exempts developers from any misuse liability, was beneficial for DeFi innovators, a view that CZ conceded.
Increased Funding for DeFi Projects
Recent figures suggest that venture capitalists are rebalancing their portfolio from CeFi initiatives, extending more support to DeFi projects. As per CoinGecko's report from March 1st, digital asset investment companies contributed $2.7 billion to DeFi projects in 2022, marking a 190% increase from the previous year. Meanwhile, CeFi-related investments saw a 73% nosedive, settling at $4.3 billion during the same year. The report alluded to DeFi as the emerging growth hotspot for the cryptocurrency industry.