Changpeng Zhao: There are too many bubbles in DeFi and I am full of expectations for Ethereum 2.0


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Editor’s note: Have doubts about DeFi? Still sneer at Ethereum 2.0? May wish to listen to the opinions of the exchange leaders, in Zhao Changpeng’s opinion

Changpeng Zhao, chief executive of Binance, a major cryptocurrency exchange, said in an interview with Cointelegraph that the hot DeFi field is full of bubbles, and he is full of expectations for the Ethereum 2.0 that is under development.

In the interview, he first talked about his understanding of DeFi. He mentioned that the term originally referred to anything related to decentralized finance. At that time, the term was often associated with lending platforms such as decentralized loans. together. However, entering 2020, DeFi began to be associated with liquidity mining, and cryptocurrency was used by automatic market makers to provide liquidity, so that other users could obtain lower spreads and more favorable prices when trading.

He mentioned, “This kind of DeFi is very popular now, but the competition is intensifying. I think the incentive mechanism we see now may not last.”

As to why DeFi can be successful in the field of automatic market makers, Changpeng Zhao believes that automatic market makers use a curve pricing mechanism, and they hold different assets with a fixed ratio in the liquidity pool. This is very transparent. If investors lose money, they will know why. This pricing method is very effective when assets are relatively up and down.

Regarding how Binance follows the DeFi trend, Changpeng Zhao said that Binance still hopes to promote innovation and actively list some DeFi tokens.

Changpeng Zhao said, “We are also learning from the DeFi model. In fact, we are incorporating it into the field of centralized finance. Now on, we have a Binance liquidity trading product. Our target users are more Novice users, they don’t want to own their keys because they are afraid of losing them. We provide simpler user interfaces for these users so that they can use the same mechanism.”

Regarding Ethereum 2.0, which has received much attention in the crypto industry, he frankly said, “When I was in Ethereum 1.0, I underestimated Vitalik. When he talked to me about this project in 2015, I said that he was too greedy. But it made me Surprisingly, he proved me wrong. He released Ethereum. I think the Vitalik team and community are capable of completing some really difficult technical challenges. They are powerful innovators.”

Changpeng Zhao also said, “I have high expectations for Ethereum 2.0, but I think it will take a while before it comes out. If you look at the timeline of Ethereum 2.0, they must first switch to PoS mining, which is a a big change.”

Regarding the prospects of DeFi, he mentioned, “I see a lot of bubbles in the DeFi field, and many projects are empty checks without any progress. Many DeFi projects died after only two weeks of hot. But automatic market makers and liquidity The concept of sexual mining will continue to exist, but it will not be so compelling. I think the development of DeFi will slow down, but some core innovations will remain.”

He thinks this is like the ICO boom of the year. Although most ICO projects have failed, there are also some successful projects. Binance is one of them.

Author Liang Che