To our DeFi community,
DeFi comes to CeFi. It’s too good for them to resist.
We mentioned this last week, but DeFi tokens have been on an absolute rift in the past few months. Now centralized exchanges are trying to capitalize on the new wave of tokens that are booming in the Ethereum economy. This trend was marked by the fact that in early June, Coinbase announced its exploration of a number of new crypto assets, half of which were DeFi tokens. This week, Binance announced the listing of SNX, a massive win for the Synthetix Spartans as Binance continues to accumulate billions in volume every day.
Graphic via Coinbase blog
But listing DeFi assets is just the beginning.
We’re building something much bigger. Do you remember 2017 when DEXs sucked? Well, they offer a significantly better user experience than their centralized counterparts. If you keep your own assets on Ethereum (i.e. using MetaMask) it doesn’t take hours or days to get a new DEX on board – it takes seconds. You connect your MetaMask and you’re ready to go. No KYC, no paperwork, and minimal trust required. It’s seamless onboarding for everyone in the world. More importantly, DeFi protocols operate at a much lower (and more efficient) cost basis than anything centralized exchanges can build. Instead of centralized exchanges building their own infrastructure, they will eventually be forced to use Ethereum’s existing, permissionless financial infrastructure. This is discussed in detail 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 if you offer similar pricing without taking great risks. Do you want to offer smooth swaps for every Ethereum asset? Integrate Uniswap or Kyber. Would you like to offer fun savings games? Pool together. Concerned 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 where Coinbase integrates Compound right into its consumer application. Every Coinbase user can earn a nice 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 DeFi.
The value and benefits of DeFi protocols are getting too high. You will sink to the bottom of the technology pile and centralized exchanges will eventually have no choice but to build on it.
It’s only a matter of time.
Until next week!
–Lucas
interest charges
DAI
USDC
The leading DeFi liquidity protocol has launched its highly anticipated Katalyst upgrade
The money market creation protocol teased the details for the loan 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 outlets 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.
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