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BIS views DeFi as lacking practical applications, while CZ remains optimistic: Finance Redefined
Welcome to Finance Redefined, your weekly source of crucial decentralized finance (DeFi) insights — a newsletter designed to deliver the most important updates from the previous week.
The last week in the DeFi landscape was marked by fluctuations, including the United States Commodity Futures Trading Commission’s (CFTC) inquiry into several DeFi protocols and Binance CEO Changpeng “CZ” Zhao’s prediction that DeFi will surpass centralized finance (CeFi) in the upcoming bull market.
While CZ envisions a promising future for DeFi, a report from the Bank for International Settlements (BIS) contends that a pure version of DeFi cannot exist autonomously and has limited applicability in the real world.
The Shiba Inu ecosystem’s layer-2 network, Shibarium, has experienced significant growth following its relaunch, with over one million wallets established; however, this advancement has yet to influence the price of the Shiba Inu (SHIB) token.
The top 100 DeFi tokens saw a surge late on Friday, with the majority of tokens recording positive weekly gains.
Binance CEO CZ predicts DeFi will surpass CeFi in the next bull market
Binance CEO Changpeng Zhao forecasts that DeFi could potentially exceed centralized CeFi in the forthcoming bull market.
During a live X (formerly Twitter) Spaces session on Sept. 1, titled CZ AMA, Zhao expressed his views on the future of DeFi. “I believe the more decentralized the industry becomes, the better,” he stated, adding that it may not be long before it overtakes CeFi trading volumes.
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CFTC takes action against DeFi protocols Opyn, ZeroEx, and Deridex
The U.S. CFTC is initiating regulatory measures against three DeFi protocols for allegedly failing to register various derivatives trading offerings. The U.S. commodities regulator announced it had issued orders against the protocols Opyn, ZeroEx, and Deridex in a statement on Sept. 8.
Deridex and Opyn were accused of not registering as a swap execution facility or designated contract market and failing to register as a futures commission merchant. The two protocols also did not comply with customer provisions outlined in the Bank Secrecy Act, according to the CFTC.
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BIS: “Pure” DeFi faces challenges for real-world application due to oracle dependency
The reliance on oracles in DeFi is a significant barrier to real-world adoption, as noted by the authors of a Bank for International Settlements bulletin. The issues surrounding oracles are both practical and principled, and the study’s authors found no viable solutions to these challenges.
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An oracle serves as a third party that supplies real-world data to or from a DeFi protocol. By nature, an oracle is centralized, and its involvement indicates that a protocol is not entirely decentralized — if this is accepted, then trustlessness is compromised, the authors indicated. This is likely to be a critical flaw for applications involving real-world assets, the authors concluded.
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Binance to refund users $1 million for Cyber Earn incident
Cryptocurrency exchange Binance is set to reimburse users $1 million in Tether (USDT) regarding its management of the CyberConnect (CYBER) token situation.
As detailed by the exchange on Sept. 7, a price discrepancy involving listed CYBER tokens occurred the previous week due to a liquidity shortage affecting CYBER cross-chain bridges on the Korean cryptocurrency exchange Upbit. This situation led to arbitrageurs borrowing CYBER from Binance to capitalize on the price difference. Consequently, Binance users who staked CYBER in its Flexible Earn Program were restricted from redemptions, as the staked assets had been borrowed, reaching the loan limit.
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Shibarium surpasses one million wallets amid rapid expansion, SHIB yet to align
The total number of wallets on Shiba Inu’s newly launched layer-2 network, Shibarium, has exceeded one million in a rapid ascent since its relaunch.
This milestone — announced in a Sept. 3 blog post by the official Shibarium team — indicates that at least 900,000 wallets were created since Shibarium’s relaunch on Aug. 28, just two weeks after the Shibarium network initially went live — despite some technical challenges.
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DeFi market overview
Data from Cointelegraph Markets Pro and TradingView reveals that the top 100 DeFi tokens by market capitalization experienced a late bullish surge, with most tokens trading positively on the weekly charts. The total value locked in DeFi protocols reached $49.73 billion.
Thank you for reading our summary of this week’s most significant DeFi developments. Join us next Friday for more stories, insights, and education regarding this rapidly evolving sector.
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