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ETH · 4w

All in on DeFi: Why the Days of Centralized Exchanges Are Numbered

DeFi, or decentralized finance, finally found its footing this year, with numerous DeFi tokens and protocols gaining widespread traction amongst crypto users. Powered by smart contract technology, innovations like yield farming have allowed everyday users to earn unprecedented interest on their crypto assets. 

DeFi is booming, and today the market is filled with all kinds of borrowing and lending protocols, many of which compete with one another on the basis of providing users with meteoric yields. It’s not uncommon to see protocols advertising double or triple digit interest rates – a far cry from the ~0.5% interest rates commonly seen on so-called “high-yield” traditional savings accounts. While many of these protocols will prove to be unsustainable, make no mistake: Look back in a few years, and it’ll be clear this emergent wave of protocols have set larger forces into motion. 

Changpeng "CZ" Zhao is the founder and CEO of Binance, which operates the largest digital asset exchange by volume.

Today’s most promising DeFi apps all share a similar vision for the future: The creation of a divergent financial system where capital and data flows more equitably, shifting control away from institutions and towards the individual. However, there isn’t a straight path from point A to point B. The most popular DeFi apps are still dwarfed by most centralized exchanges, which wield outsized impact and influence within the cryptocurrency and blockchain space. The best centralized exchanges offer a compelling mix of user-friendly services that are more easily understood by end-users. 

For instance, our cryptocurrency exchange, Binance, offers a comprehensive suite of financial products that mirrors those found in traditional markets. Users can buy, sell and trade crypto, choose options and futures trading, apply for crypto loans, earn passive income and more with a single login. These centralized products are easy to use and comprehend, and can be acces...

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