Changpeng “CZ” Zhao, the CEO of Binance, anticipates that decentralized finance (DeFi) will outgrow centralized finance (CeFi) during the next cryptocurrency bull market. During a live X Spaces event on September 1, Zhao expressed his belief that the cryptocurrency industry is on a path to increased decentralization, asserting that this is a positive direction for the industry.
Zhao noted that DeFi currently represents approximately 5% to 10% of CeFi trading volumes. However, he suggested that these numbers could swell considerably in the next bull run, possibly surpassing CeFi. This projection follows a report by Cointelegraph highlighting a 444% increase in trading volume on top decentralized exchanges within 48 hours in the wake of legal action against centralized exchanges like Coinbase and Binance by the United States Securities and Exchange Commission (SEC).
Discussing recent legal developments, Zhao pointed to the dismissal of a lawsuit against the decentralized protocol Uniswap as a positive indicator for the industry. The case had been filed by individuals who alleged that they lost money because of scam tokens on the platform, but it was dismissed, citing that the state of cryptocurrency regulation didn’t offer a clear avenue for recourse. Zhao applauded the judge’s decision, agreeing that developers should not be held liable for how people misuse DeFi platforms.
Venture capitalists also seem to be shifting their focus toward DeFi. According to a report from CoinGecko dated March 1, investments in DeFi projects for 2022 reached $2.7 billion, marking a 190% increase from the previous year. In contrast, investments in CeFi projects decreased by 73% to $4.3 billion, potentially indicating that the sector is reaching a point of saturation.
Zhao summarized these trends as suggesting that DeFi is emerging as the new high-growth area for the crypto industry. He concluded that the path toward more decentralization is “really good,” affirming that the development of code in the crypto space should be considered a form of free speech.