The question of whether DeFi will take over CeFi and DEXs replace CEXs keeps lingering in people’s minds, especially since the space has begun to rise so rapidly. Yet, simply observing how CEXs (especially industry-leading CEXs) are responding to the rise of DeFi is a great reference to the development of the industry as a whole. For the meantime, mainstream centralized exchanges appear to have found a development path that can achieve a win-win situation for DeFi and CEXs. Let’s take a closer look.
CEXs Reduce Investor Risk in DeFi
Currently, the DeFi space is mainly led by relatively small-scale innovative companies that created achievements that could not be ignored. This caused many speculators to flood the space and some misconduct occurred, inflicting unnecessarily high risks on investors. Furthermore, because DeFi itself is still very difficult to understand, it increases the complexity for investors in choosing investment targets.
This is an area in which CEXs, with their proven experience in assessing the quality and longevity of projects, can assist. For example, if a professional team conducts a strict review of the project, this will significantly reduce the risk for investors, and many leading CEXs have already begun to do so.
Take OKEx as an example of a centralized exchange working to embrace the DeFi movement. Beyond listing promising DeFi projects for its users, the exchange opened up a dedicated DeFi sector on its platform where users can trade more than 50 popular and DeFi tokens selected by the OKEx team.
In addition, OKEx launched its own initiative called OKEx Earn, which allows users to earn interest on their crypto portfolios and has integrated a variety of DeFi projects to help users participate in one-click yield farming or liquidity mining. There are several benefits to users when selecting this type of platform to participate in DeFi initiatives.
Through the screening of OKEx, for example, when users participate in DeFi projects, in addition to greatly reducing the risks caused by the quality of the project, they do not need to bear the increasing gas fees of the Ethereum network. Moreover, they can navigate through a familiar interface and a safe environment, participating in DeFi and earning rewards through the safeguard of a CEX.
Other DeFi Initiatives Offered by CEXs
In addition to cooperating with high-quality projects, many CEXs are also actively expanding their own decentralized financial businesses. OKEx has also developed a C2C Lending program that also provides a Savings function. If users are unwilling to profit from selling tokens, they can earn interest through borrowing or saving, using their own cryptocurrency as collateral to obtain peer-to-peer loans through trusted centralized transactions.
With the development of DeFi, the gap between crypto finance and traditional finance is rapidly closing, in terms of infrastructure, service types, passive income, and much more. For the first time in history, we have the opportunity to provide financial services for everyone in a safe and secure way. This model of CEX and DeFi cooperation will bring a win-win situation in financing all through cooperation rather than confrontation.
About the Author: Jay Hao is the CEO and Chief Customer Service Officer at OKEx, a leading crypto spot and derivatives trading platform.
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