Major crypto exchange Binance announced that they are attempting to bridge decentralized (DeFi) and centralized finance (CeFi) via a new support fund, prompting discussions of the creation of “CeDeFi.” At the same time, crypto market data provider Messari CEO warned of a DeFi bubble pop coming sooner than expected.
Binance said it’s “establishing a USD 100 million seed fund to empower emerging projects and drive collaboration” between CeFi and DeFi. DeFi projects will soon be called to submit their proposals, said the company, with “strong projects” competing to win “up to USD 100,000 in funding,” while “high-quality projects may even have the opportunity to participate to be listed on Binance.”
Among other ways they’re trying to bridge CeFi and DeFi, the exchange said it’s working with the Binance Smart Chain community through the Token Canal project, announced several days ago, to help developers connect the Binance Smart Chain (the exchange’s own dual-chain architecture) with other public chains, enabling tokens on those other chains to be connected to Binance’s, including Bitcoin (BTC) and Ethereum (ETH).
And then, the new term ‘CeDeFi’ was born in the Cryptosphere. Binance CEO Changpeng Zhao said that “DeFi is great. I love it. But CeFi is about to give it a run for its money.” There are two advantages CeDeFi offers, he said:
i understand that a lot of people in defi look negatively at exchanges / cefi
imo the best to think about it is an additional set of plays to consider with its own pros and cons
there’s no need to pick a side when you can cherry pick and enjoy the best of both when it suits you https://t.co/02CVf4KvZM
— 찌 G 跻 じ ⚡️ (@DegenSpartan) September 11, 2020
Meanwhile, crypto market data provider Messari CEO Ryan Selkis was discussing a DeFi bubble, warning that it will pop sooner than expected, drawing a comparison with the 2017 initial coin offering (ICO) boom. The latter boomed because people thought there’d be a coordinating utility token for every industry, said Selkis, while DeFi is “just one big pool of capital sloshing around a small group of insiders and mercenaries who will soon run out of victims to fleece.”
And while it’s an interesting experiment, in which “smart people are making a killing,” he wouldn’t recommend DeFi to most people, he added.
Though many seem to agree with him, Selkis was promptly criticised by some who claimed that he does not understand the DeFi space, calling him “an amateur Defi player.”
My biggest source of alpha the past 3 months has simply just been using DeFi protocols.
It’s the only way you’ll be able to appreciate the value they create and opportunities they offer.
DeFi is becoming way to complex to just consider it abstractly from the sidelines.
— Ryan Watkins (@RyanWatkins_) September 11, 2020
All that said, some, like Managing Director of IDEO CoLab Ventures Ian Lee, argue that “CeFi is going to be eaten by DeFi from the ground up.”