To our DeFi community,
DeFi comes to CeFi. It is too good for them to resist.
We mentioned this last week, but DeFi tokens have been on an absolute rift for the past few months. Now the centralized exchanges are trying to capitalize on the new wave of tokens that is booming in the Ethereum economy. This trend was marked when Coinbase announced in early June that it was researching a number of new crypto assets, half of which were DeFi tokens. This week, Binance announced the listing of SNX, a huge win for the Synthetix Spartans as Binance continues to accumulate billions in volume every day.
Graphic via Coinbase Blog
However, listing DeFi assets is just the beginning.
We’re building something much bigger. Do you remember 2017 when DEXs sucked? Now they offer a significantly better user experience than their centralized counterparts. If you keep your own assets (e.g. MetaMask) on Ethereum, it doesn’t take hours or days for a new DEX to become available – it takes seconds. You connect your MetaMask and make your way to the races. No KYC, no paperwork, and minimal trust required. It’s seamless onboarding for everyone in the world. More importantly, DeFi protocols operate on a much lower (and more efficient) cost basis than anything centralized exchanges can build. Instead of centralized exchanges setting up their own infrastructure, they will ultimately be forced to use Ethereum’s existing, permit-less financial infrastructure. This is highlighted at length in David Hoffman’s Protocol Sink Thesis.
Would you like to offer your users attractive interest rates? Integrate Compound, Aave or the Dai savings rate (which, by the way, is still 0%). Good luck in offering similar prices without significant risks. Do you want to offer smooth swaps for any Ethereum asset? Integrate Uniswap or Kyber. Would you like to offer entertaining savings games? PoolTogether. Worried that these protocols are too risky for the average user? Well … you can automatically insure your deposits with Nexus Mutual or with Opyn. And when a domino falls, the rest follows.
Imagine a scenario in which Coinbase Compound integrates directly into the consumer application. Every Coinbase user can earn a good interest rate right in the application. Do you think Binance or Gemini will sit back and let that happen? No chance. They will all strive to offer the best products and services available in crypto. All of this is built on top of DeFi.
The value and benefits of DeFi protocols are getting too dense. You will sink to the bottom of the technology stack and centralized exchanges will eventually have no choice but to build on it.
It’s only a matter of time.
Until next week!
The leading DeFi liquidity protocol has launched its highly anticipated Katalyst upgrade
The money market creation protocol teased the details for the credit delegation
The stablecoin liquidity aggregator will launch its native token MTA on June 15th
One of the leading Crypto exchanges listed SNX, a good indication of what’s to come!
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Analyst at Bankless – a premier resource for Open Finance. Lucas is actively contributing to the DeFi ecosystem with appearances at other notable DeFi stores including The Defiant and Our Network. He has years of experience working with dozen of blockchain and token startups focusing on token economics, marketing and growth.