Welcome to Finance Redefined, a weekly newsletter that provides you with essential decentralized finance (DeFi) insights and aims to bring you the most important developments of the past week.
The past week has seen everything from the U.S. Commodity Futures Trading Commission (CFTC) investigations into multiple DeFi protocols to Binance CEO Changpeng Zhao predicting that DeFi will be in the next bull run.
Although CZ predicts a bright future for DeFi, a report from the Bank for International Settlements (BIS) believes that DeFi in its pure form cannot survive independently and has few use cases in the real world.
The Shibarium ecosystem’s layer 2 network, Shibarium, continues to grow rapidly following its relaunch, with over 1 million wallets created; however, its progress has yet to impact the price of the Shiba Inu (SHIB) token.
Prices for the top 100 DeFi tokens surged late Friday, with most recording positive weekly gains.
Binance CEO CZ predicts DeFi will grow more than CeFi in the next bull run
Binance CEO Changpeng Zhao predicts that DeFi has the potential to surpass centralized CeFi in the next bull market.
In an X (formerly Twitter) Spaces live broadcast called CZ AMA held on September 1, Zhao shared his thoughts on the future of DeFi. “I think the more decentralized the industry is, the better,” he declared, adding that it might not be long before it takes over CeFi trading volume.
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CFTC cracks down on DeFi protocols Opyn, ZeroEx and Deridex
The U.S. Commodity Futures Trading Commission (CFTC) is taking regulatory action against three DeFi protocols for allegedly failing to register various derivatives trading products. The U.S. commodities regulator announced in a statement on September 8 that it had issued orders targeting the Opyn, ZeroEx and Deridex protocols.
Deridex and Opyn were charged with failing to register as a swap execution facility or designated contract market and failing to register as a futures commission merchant. Both agreements also failed to comply with customer terms set forth in the Bank Secrecy Act, the CFTC said.
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“Pure” DeFi has little chance of being used in the real world due to the need for oracles: BIS
The need for oracles in DeFi is a major barrier to real-world adoption, according to the authors of the BIS announcement. The problems with oracles are both practical and principled, and the study’s authors believe there is no way around them.
Oracles are third parties that provide real-world data that flows into or out of DeFi protocols. The authors state that oracles are inherently centralized, and their existence means that the protocol is not fully decentralized—if this is tolerated, trustlessness disappears. For real-world assets, this can be a fatal flaw, the authors write.
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Binance will compensate users $1 million for Cyber Earn incident
Cryptocurrency exchange Binance is refunding $1 million in Tether (USDT) to users over its handling of the CyberConnect (CYBER) token incident.
As the exchange stated on September 7, the listed CYBER token experienced price differences a week ago as a liquidity crunch restricted the CYBER cross-chain bridge on South Korean cryptocurrency exchange Upbit. This resulted in arbitrageurs borrowing CYBER from Binance to profit from the difference. In turn, Binance users who staked CYBER in the Flexible Yield Plan are also prohibited from redeeming because the collateral assets have been borrowed, reaching the loan limit.
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Shibarium is growing rapidly, with wallets exceeding 1 million, but SHIB has yet to catch up
The total number of wallets on Shiba Inu’s newly launched second-tier network Shibarium has exceeded the 1 million mark since its relaunch, growing rapidly.
The official Shibarium team announced the milestone in a blog post on September 3, which means that at least 900,000 wallets have been created since Shibarium relaunched on August 28, just two weeks before the Shibarium network first went live. There are some technical issues.
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DeFi Market Overview
Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market capitalization have seen a late bullish surge, with most tokens trading in the green on the weekly chart. The total value locked in DeFi protocols reaches $49.73 billion.
Thanks for reading our roundup of the week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education about this dynamic and growing field.
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