Binance's approach to the DeFi business: yes Netflix model, no Kodak

Binance's approach to the DeFi business: yes Netflix model, no Kodak - Changpeng Zhao 1024x683Binance CEO Changpeng Zhao, better known as CZ, closed the LA Blockchain Summit on Wednesday talking about DeFi and the importance of decentralization.

CZ: "In the long run, I think DeFi will replace CeFi"

During the LA Blockchain Summit, Binance CEO Changpeng Zhao confirmed his previous statement, saying, "In the long run, I think DeFi will replace CeFi." And Binance, the largest centralized cryptocurrency exchange in the world, is happy to be "cannibalized".

CZ began his speech by discussing which aspects of decentralized finance, such as the suite of blockchain-based protocols that allow you to lend or borrow, earn interest and more without using a financial institution, would remain long-term. Binance CEO likes what he calls "the liquidity aspect of DeFi".

But he thinks the ultra-high-yield model, in which copycat projects proliferate and offer ever higher yields, is not sustainable. CZ predicted: "I think we will eventually settle into a healthier range, I guess between 5 and 15% APY."

But, in the present, where fly-by-night tokens come out every week, CZ generally approves of listing those tokens, using the project's overall popularity as a guide. "Binance started out as an altcoin exchange, so we have a history of listing a fairly large selection of tokens," he said, acknowledging that most of these projects will eventually fail when markets (especially young markets like this one) they will mature.

But some innovations will have the power to resist. As more and more DeFi tokens and protocols gain ground - and CZ thinks they will - the CEO recognizes that Binance will have to adapt to the times.

The need to adapt to changing times to survive

“Let's consider the picture where a centralized exchange is just like a DVD version of Netflix,” referring to the streaming giant's principle, when it delivered DVDs by mail. “It's not our long-term goal.

So even though we run one of the largest centralized exchanges in the world, it's not something we really need to cling to. We are more interested in innovation. " Zhao referred to Binance's $ 100 million booty over the years investing in DeFi projects and protocols that aren't on anyone's radar. Most will not be successful, but some may be more useful than the more popular options.

"There are always more opportunities in the future than in the past," he said. Under CZ's leadership, therefore, Binance is not interested in defending its business model, but in finding the next one.

He pointed to Kodak as an example, which kept a tight grip on film even as the market shifted to digital photography and failed in the meantime. He doesn't want Binance to make the same mistake. "We will find something valuable," he said.