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Binance States To Be Like Netflix, Not Kodak, When It Comes To DeFi

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Twitter Accounts of CoinDesk, Bitfinex and Binance Hacked
Twitter Accounts of CoinDesk, Bitfinex and Binance Hacked

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Changpeng “CZ” Zhao, the CEO of Binance, has recently extended his DeFi Coming-Out Party. Speaking to one Anna Irrera from Reuters at the LA Blockchain Summit, CZ was quoted to say that Centralized Finance (CeFi) will eventually be replaced by Decentralized Finance (DeFi), when looking at the long term.

DeFi Set To Overtake CeFi: CZ

Binance stands as one of the world’s biggest centralized crypto exchanges, and is reportedly happy that it will eventually be “cannibalized” by the DeFi space.

To start this little conversation out, CZ highlighted some key aspects of DeFi, which is the array of blockchain-based protocols allowing individuals to borrow, lend, invest and earn interest all the while not using a single financial institution to facilitate it. According to CZ, DeFi will stick for a very long time.

Sticking To The Founding Fundamentals

In particular, CZ is keen on what he describes as the “Liquidity pool” aspect of DeFi at large, but believes that this model, that offers super-high yields, won’t be sustainable. The problem is only compounded thanks to a veritable horde of copycat projects out there, each offering higher returns than the one before it. Zhao predicted that this industry will eventually settle down into a healthier range, with the man himself wagering anything between 5 to 15% APY.

CZ made it clear that he is perfectly fine listing fly-by-night tokens, those tokens tending to show up every week or so nowadays. He referenced the overall popularity project as something used as a guide.

He highlighted how Binance itself first served as an altcoin exchange, thus Binance had established itself historically by listing an array of tokens. CZ further made it clear that he was already convinced that many of these projects will eventually fail, citing how markets, typically young markets such as DeFi, get to work. Even so, he noted how some innovations have the staying power needed to be relevant for far longer.

Netflix Vs Kodak

CZ is convinced of two things, overall: More and more DeFi protocols and tokens will start to gain traction overall, and Binance as an exchange needs to change if it wants to maintain its superiority.

Zhao pointed to Netflix, or rather its first iteration. For those who can remember it, the massive streaming giant’s first iteration was a humble service delivering DVDs through the mail, but has innovated with the times and stayed relevant. By contrast, Kodak, as CZ pointed out, defended its business model to the end, staying the leader in the film market amid a world moving to digital cameras, eventually going bankrupt as a result.

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