DeFi-based projects are continuing to surge and their total value locked has reached about $11 billion. Therefore, Binance, the world’s leading crypto exchange, has decided to adjust its business model to tag with the DeFi ecosystem.
The world’s leading cryptocurrency exchange by trading volume Binance may adapt its business model to tag along with the growth seen in the decentralized finance (DeFi) ecosystem. Speaking to Coindesk in an exclusive interview, Binance Chief Executive Officer Changpeng Zhao acknowledges the contradictions inherent in trying to tap into the fast-growing business of decentralized finance while trying to defend his company’s reign as the world’s largest cryptocurrency exchange.
The rate at which DeFi based applications, particularly those built on the backdrop of the Ethereum blockchain has been surging in recent times has called for increased introspection amongst industry players including cryptocurrency exchanges. With the total value locked in these DeFi projects currently estimated to about $11 billion, it is imminent that these projects are gaining a large number of the entire crypto market share, a source of concern to exchanges unwilling to adapt to the change.
Known for being proactive in bringing new innovations to life, Binance is upping its game with a recent delve into DeFi, the launch of Binance Smart Chain amongst others. Zhao said that the company’s mission is not to build just a centralized finance (CeFi) exchange but that which can be adjusted to accommodate for longer-term growth. He said:
“Right now it is one of our larger businesses that support our growth. But over the long term, we want to push decentralization”.
Binance DeFi Push, Meeting Projected Expectations?
Earlier in September Binance announced its smart chain (BSC) that will enable the creation of smart contracts and the staking mechanism for BNB. The original design of the Binance Smart Chain is to serve as an Ethereum Virtual Machine-compatible blockchain, aimed at aiding developers to create DeFi applications and smart contracts.
While arguably functional, the question remains whether the BSC infrastructure has met with projected expectations in terms of the success of the sprouting smart contracts. Following the launch of the Binance Smart Chain, anonymous developers debuted the BakerySwap that was particularly introduced by Changpeng Zhao. In about an hour after launch, the BakerySwap protocol collapsed either owing to too much pressure or the infrastructural capabilities of the BSC.
In defending this position, Zhao explained:
“There are probably more projects that failed on Ethereum, but nobody complains to Vitalik. So I think it just takes time for people to realize that ‘Look, the projects on Binance Smart Chain are not run by Binance’”.
However correct he is, the remodeling of the Binance business model has been noted by Zhao to be necessary should these DeFi growths continue into the foreseeable future. In doing this, the outspoken CEO said he’d rather focus on customer-centered value addition to driving sustainability.
“So in my mind, I’m never worried about the business model. I’m always much more worried about if we have users using the product. There’s always multiple options for business models, so the key is to build something that’s useful.”
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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.