Changpeng Zhao States He Expects DeFi To Cannibalize His Exchange Author: Ali Raza Last Updated: 30 September 2020 Changpeng “CZ” Zhao stands as the CEO of Binance, and has acknowledged the contradictions regarding him trying to establish a market within the rapidly expanding decentralized finance (DeFi) sector, all the while trying to maintain Binance’s position as one of the top crypto exchanges out there. Adapt Or Die Binance’s new venture into the DeFi space, named Binance Smart Chain, tries to replicate several features that Ethereum’s blockchain can offer. This, in turn, has proven to be an ideal space overall for developers building trading and lending applications with a decentralized, blockchain base. Theoretically, one day these applications could even compete, or overtake, the trading firms of Wall Street and the traditional lenders of the mainstream financial industry. However, DeFi also stands as a threat to crypto exchanges, such as Binance. Trying To Maintain Superiority Binance, much like its rivals such as Huobi, OKEx, and Coinbase, is trying to maintain its central hold on the crypto markets. They must do this while new competitors are in the arena from the DeFi space, such as Curve, Uniswap, SushiSwap, and Balancer. These DeFi startups are gaining a larger share of trading volumes, which is the first case of “traditional” crypto being threatened by “innovative” crypto at such a scale and way. Zhao has made it clear that he is open to the idea of changing things up at Binance in order to stay relevant to its business model. This is especially so due to the DeFi protocols gaining sixteen times in value of collateral locked in this year, now standing at $11 billion. In an interview Zhao explained that Binance doesn’t have a mission to build a Centralized FInance (CeFi) exchange. He simply pointed out that it’s one of the larger businesses Binance has, thus supporting the company’s growth. However, Zhao stated that he is planning to push into decentralization as a long-term plan. Sacrifices Must Be Made The company was forced to sacrifice certain centralization elements in order to compete with Ethereum when it designed the Binance Smart Chain. This, in turn, will see Binance protect its brand, as well. The Binance Smart Chain is controlled by 21 node operators, who are elected by the Binance Coin (BNB) holders. However, due to the company itself being the largest holder of BNB, it still has a significant influence in regard to the Binance Smart Chain’s direction. Zhao was clear, however, that Binance isn’t trying to create an “Ethereum Killer” with the Binance Smart Chain. Instead, Zhao stated that he only wanted to provide an alternative to the massive transaction fees currently plaguing Ethereum.