BIS thinks DeFi has no use cases, but CZ is bullish: Finance Redefined

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

The past week in the DeFi ecosystem was filled with ups and downs, from the United States Commodity Futures Trading Commission’s (CFTC) investigation into multiple DeFi protocols to Binance CEO Changpeng “CZ” Zhao’s forecast that DeFi would outgrow centralized finance (CeFi) in the next bull run.

While CZ anticipates a bright future for DeFi, a report from the Bank for International Settlements (BIS) argues that a pure form of DeFi cannot survive independently and has little use case in the real world.

The Shiba Inu ecosystem’s layer-2 network, Shibarium, has continued its rapid growth post-relaunch, with over one million wallets created; however, its progress has yet to impact the price of the Shiba Inu (SHIB) token.

The top 100 DeFi tokens had a late Friday surge, with most of the tokens posting positive weekly gains.

Binance CEO CZ forecasts DeFi outgrowing CeFi in the next bull run

Binance CEO Changpeng Zhao predicts that DeFi has the potential to surpass centralized CeFi in the next bull run.

During a Sept. 1 live X (formerly Twitter) Spaces, titled CZ AMA, Zhao shared his thoughts on the future of DeFi. “I think the more decentralized the industry becomes, the better,” he declared, adding that it may not be long before it takes over CeFi trading volumes.

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CFTC cracks down on DeFi protocols Opyn, ZeroEx and Deridex

The U.S. CFTC is taking regulatory action against three DeFi protocols for allegedly failing to register various derivatives trading offerings. The U.S. commodities regulator announced it had issued orders against protocols Opyn, ZeroEx and Deridex in a Sept. 8 statement.

Deridex and Opyn were charged for failing to register as a swap execution facility or designated contract market and failing to register as a futures commission merchant. The two protocols also failed to comply with customer provisions set out in the Bank Secrecy Act, the CFTC said.

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“Pure” DeFi has little chance for real-world use because of need for oracles: BIS

The need for an oracle in DeFi is a major impediment to adoption in the real world, according to the authors of a Bank for International Settlements bulletin. The problems with oracles are both practical and principled, and the study’s authors saw no way around them.

An oracle is a third party that provides real-world data flowing to or from a DeFi protocol. An oracle is centralized by nature, and its presence means a protocol is not fully decentralized — if that is tolerated, then trustlessness is lost, the authors said. That is likely to be a fatal flaw for use with real-world assets, the authors wrote.

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Binance to reimburse users $1 million for Cyber Earn incident

Crypto exchange Binance is refunding users $1 million of Tether (USDT) over its handling of the CyberConnect (CYBER) token incident.

As described by the exchange on Sept. 7, a price discrepancy on listed CYBER tokens occurred the week prior due to a liquidity crunch constricting CYBER cross-chain bridges on the Korean cryptocurrency exchange Upbit. This led to arbitrageurs borrowing CYBER from Binance to profit from the difference. In turn, Binance users who staked CYBER in its Flexible Earn Program were barred from redemptions, as the staked assets had been borrowed, reaching the loan limit.

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Shibarium hits one million wallets amid meteoric growth, SHIB yet to catch up

The total number of wallets on Shiba Inu’s newly launched layer-2 network, Shibarium, has surpassed the one million mark in a meteoric rise since its relaunch.

The milestone — announced in a Sept. 3 blog post by the official Shibarium team — means there were at least 900,000 wallets created since Shibarium’s relaunch on Aug. 28, and only two weeks after the Shibarium network first went live — albeit with some technical hiccups.

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DeFi market overview

Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a late bullish surge, with most tokens trading in the green on the weekly charts. The total value locked into DeFi protocols touched $49.73 billion.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.

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