CZ - Decentralized Finance and DEXs will be bigger than CEFi and CEXs

I was watching a podcast yesterday, and precisely, at the 27th minute, CZ admitted to something I never imagined, not when he's always been all up in the importance of centralized exchanges. When we look at things from a broader spectrum, we begin to see indicators we would have casually missed.

Defi today controls over $80 billion in TVL assets, with a $100 billion inflation-adjusted TVL over a period of 90 days. This value is peanuts compared to the entire ecosystem valuation, however, what's more there to watch out for is inevitably the takeover that we should be experiencing in the next 10 years.

This had always been my long-term focus, marking down on what's soon to be a trillion-dollar sector, way bigger than the traditional banking system in the long run, even CZ agrees as he acknowledge in the podcast that defi and decentralized exchanges will be bigger than centralized finance and exchange, see podcast (58mins long). What we see today is just the tiny pieces, because once you understand Defi and its value-generating structures, you know it's quite under the radar of things.

Bigger Picture

As aforementioned, it's all about the bigger spectrum, for example, when you look at the market share of NFTs which sits at a little above $40 billion all time trade volume so far, it's crazy money for a sector with the least structural developments. Matter of fact, blockchain games are the only mechanisms of sustainable growth within this space currently, most of every other thing is based on minimum merits structure for the broader space.

Let's look at the centralized exchanges, Binance makes enough money to pay over 6,000 employees, of which they aim to get to 8,000 before the year runs out, as confirmed by CZ. This leaves the question, judging by the company's position in the space, that even without looking, we know that's a whole lot of money. Most of this revenue is derived from trading fees.

Using a rough estimation, Binance controls a monthly trade of over $1 trillion in crypto assets, believe it or not, with a flat fee rate of 0.1%, Binance would be making $1 billion, and we would be looking at about $750 million if every trader embraces it's 25% off trading fees with BNB coin. This would naturally boost its economy, because with literally every trader using BNB, that's a crazy price impact right there.

Now let's bring this back to decentralized finance, where there's a variation in trading fees, which isn't really the case, compared to the variation in tools to utilize, all having their own associated fee structure.

But where does the difference come in?

Defi is an economy that gives back

We have a number of ways to earn on Defi, and the thing is this value is created by us, but unlike the centralized exchanges where there is no incentivized structures to tap into this value, Defi on the other hand provides countless opportunities to earn this revenue.

Most mechanisms built on top of Defi go back to rewarding its participants, it's a rewarding bankless economy. Bear markets tend to make some people realize the significance of Defi, although it's often difficult to acknowledge the significance of units over price value, this makes many people lose the opportunity of sitting on a good size of cash when the bull season comes rolling in again.

^{Don't sleep on decentralized finance!}