Decentralized finance is in full swing, and it looks like one of its biggest proponents is the Binance stock exchange. The platform’s American subsidiary recently joined the Chicago DeFi Alliance to further develop the DeFi industry in the United States. In addition, Binance’s support for new DeFi projects continues to grow. The stock exchange recently showed close ties to BurgerSwap, a new decentralized exchange that aims to improve Uniswap.

While it’s clear that DeFi has a lot of focus on Binance, it’s also worth noting that Binance CEO Changpeng Zhao has been optimistic about DeFi for some time. Cointelegraph was happy to meet with Czechoslovakia to find out more about what DeFi really means, why this sector is starting to gain traction and what we can expect in the future.

Cointelegraph: First, I want you to explain what DeFi really means.

Changpeng Zhao: There are several different interpretations of DeFi. Originally, this word meant something like a decentralized economy, that is, everything that was a decentralized version of economic proposals. Initially, the term was more related to decentralized loans or lending platforms.

But something happened earlier this year when people started collecting coins into the liquidity pool. These currencies are intended to be used by an automated marketer to provide liquidity to other people to trade. This way, other users have a much smaller spread and get a much better price when shopping.

“This type of DeFi is very interesting right now. But competition continues to grow as people compete to get the most interest from liquidity providers. And people are developing more efficient ways to do this, including issuing new coins and owning those coins as discounts. ” This is the current situation. However, I believe that the incentive structures that we are seeing now are probably unstable.
CT: Why is DeFi so popular now?

Czechoslovakia: To be honest, the momentum started late last year or early this year. Automated market makers use a pricing mechanism with price tracking. Consequently, they have a fixed proportion of various assets in their liquidity portfolio. This type of auto-marketing cart has a big advantage as it is very transparent. If I am losing money, I know why. Hence, there is a chance that users will lose money, but they know exactly why. There isn’t much deception going on.

This type of pricing works well when assets are relatively high or low. This works well for stablecoins because, by definition, stable currencies must be stable. Swings a little as needed. This has actually created a very good market for people looking to switch between stable currencies.

CT: How does Binance handle DeFi?

Czechoslovakia: Although many people know that this type of project can actually compete with or attract liquidity from central stock exchanges, we will still be increasing innovation. Therefore, Binance lists the DeFi codes in some detail.

We are also learning from the DeFi model and are already integrating it into the central finance room. We now have the Binance liquidity exchange product on Our target users are more than newbies who do not want to keep their private keys because they are afraid of losing them. We offer a much simpler user interface so that these types of users have the same mechanism. We also launched a third product called Binance Pool, which allows people to collect coins like BNB and receive all the new incentives and rewards.

In terms of decentralization, we have been working with Binance Smart Chain for over a year. Binance Smart Chain is an Ethereum compatible smart contract. On the other hand, it is 100% Ethereum compatible. But when it comes to speed, it is actually much faster, which helps keep high gas costs down and the traffic congestion problem on Ethereum down, given the increased traffic that DeFi has brought.

Source: CoinTelegraph