Cryptocurrency is causing a huge paradigm shift in how the world interacts with money, financial services, and the economy in general.
El Salvador has designated Bitcoin as a legal tender, some other countries are working on launching central bank digital currencies (CBDCs), and cryptocurrencies have now become a constant fixture in
The first two modes of participating in the crypto economy were through centralized finance platforms (CeFi) and decentralized finance platforms (DeFi).
Using CeFi means that you are trusting a third-party person(s); while using DeFi means you are trusting smart contracts.
Now, CeDeFi (Centralized Decentralized Finance) has emerged as another route to participating in the crypto economy and this post explores the emergence of CeDeFi as the next step in the evolution of the crypto industry.
The post especially focuses on the finance and economics perspectives of CeDeFi and it provides insights into how CeDeFi fits crypto into the global financial and economic areas.
From CeFi to Defi, and now, CeDeFi
The first mode of engagement with crypto is through Centralized Finances (CeFi) platforms such as Binance. CeFi platforms provide a framework for the cryptocurrency industry to take on a definite form.
However, many people started complaining that the centralized nature of CeFi contradicts the very essence of cryptocurrencies as a means of exchange free of central powers.
CeFi platforms serve as gatekeepers, they have KYC requirements, and they could potentially hold too much power in what is supposed to be a decentralized economy.
The angst with CeFi led to the emergence of Decentralized Finance (DeFi) platforms such as Uniswap. DeFi is permissionless and it returns control, agency, and self-determination to crypto users.
The downside of DeFi, however, is that it has become a motley crowd of useful and useless tokens, not many people have the technical know-how or financial education to engage with DeFi, and DeFi projects often lack intuitive user interfaces and experiences.
The problems with DeFi led to the development of the third mode of participating in the cryptocurrency industry through Centralized Decentralized Finance (CeDeFi) platforms such as Unizen.
CeDeFi platforms cherry-pick the best features and functionalities of CeFi and DeFi, to provide users with the perfect mix of decentralization, protection, risk management, and accessibility.
CeDeFi as a new economics paradigm
CeDeFi, being an amalgamation of CeFi and DeFi addresses some of the underlying challenges of the DeFi ecosystem, by taking some of the key benefits of CeFi to protect the financial and economic interests of users.
In September 2021, Ryan Selkis, founder and CEO of crypto intelligence company, Messari, drew some parallels between the 2017 ICO craze and the current DeFi rush.
He predicts thata bust in the DeFi sector might be around the corner as “we’re nearing the apex of Ponzi economics, rug pulls, and ‘yield’ hopping, and ETH fees are going to eat too heavily into non-whale profits.
Ryan’s prediction is not without merit when you consider the fact that CipherTrace 2020Cryptocurrency Crime and Anti-Money Laundering Report noted that “half of all 2020 crypto hacks were of DeFi protocols” In 2021 already, investors in the DeFi sector have lost almost $700 million to rug pulls in the first 7 months.
CeDeFi Embodies The Rapid Iteration, Evolution, And Growth Philosophy At The Core Of The Cryptocurrency Industry. In The Words Of James Taylor, CBDO At Unizen, “We Cannot Turn Off The Existing Financial System Just Because It Is Centralized. Nor Can We Can’t Turn A Blind Eye To Decentralised Innovation. CeDeFi Is The Tipping Point For Mass Adoption Of Crypto Assets And Unizen Is Working With The Key Players To Make It A Reality.”
Below Are Some Of The Key Ways CeDeFi Platforms Like Unizen Are Set To Unlock New Opportunities To Integrate Cryptocurrencies With The Global Financial And Economic Sector.
- Bringing the rest of the global economy into crypto
Today, the overwhelming majority of money in the global financial system is still in fiat and fiat equivalents. Hence, even though the global economy is now mostly digital; thanks to technological innovation, the global economy still relies on fiat money that is still fundamentally analog.
To get the bulk of the global economy on board with crypto, the role of fiat gateways cannot be overemphasized; and fiat getaways are where the “Ce”, in CeDeFi makes its mark.
DeFi for all its great features is still niche, requires some level of technical savvy, and has a steep learning curve for people who are not crypto natives. Thetotal number of DeFi users is a little over 3.3 million people, with most of the top DeFi platforms (except for Uniswap) having only a few hundred thousand users, while the bulk of DeFi platforms only have a few thousand users.
CeDeFi could attract more people into the crypto space by leveraging the ease, security, and regulatory protections of CeFi to the idea of DeFi. Unizen, in particular, brings the best part of CeFi AML /CTF/KYC, compliant reporting, custodianship, and accountability and combines it with the best of DeFi.
- Managing FUD and FOMO
CeDeFi is an alternate financial system that provides a better mechanism for cryptocurrency investors and traders to manage FUD and FOMO and their portfolios. The simple fact that DeFi is permissionless – such that anybody can create a new DeFi project in a matter of minutes by using token and smart contract generatorsis a worrisome trend. The worst part is that not much thought is given to the economic stability or security that would minimize the incidences of rug pulls.
The bigger problem, however, is the lack of investor education causing many users to keep on piling into these projects as their prices have continued to race ahead of any inherently tangible value.
CeDeFi enables the listing of vetted tokens or projects because the centralized element of the CeDeFi platform forces the promoters to have skin in the game and to take personal and corporate responsibility for conducting due diligence on the assets that will be provided to the public on their platforms.
Unizen sets a good example of how CeDeFi platforms can help manage FUD and FOMO by providing smart social indicators to keep track of asset sentiment. It also delivers consistent utility yield to counterbalance bull and bear speculative cycles. The exchange also has community-run channels where the active community support each other and share insights for managing FOMO and FUD in the markets.
- Support for cross-chain interoperability:
The cryptocurrency industry is highly fragmented with Bitcoin on one level, Ethereum on the next level, and 3rd-generation blockchains such as Cardano, Polkadot, and Solana fighting for a bigger slice of the pie. The challenge with the fragmentation is that the cryptocurrency industry can’t quite put up a united formidable front in the quest to transition the world to decentralized solutions.
CeDeFi accelerates the development of cross-chain interoperability by serving as a melting pot of different projects from different blockchains. For instance, multi-asset staking on Unizen rewards stakers with tokens from multiple different projects and blockchains.
The staking payouts in multiple tokens, in turn, encourage the users to become acquainted with new projects that they might not have explored with single-asset staking on CeFi or DeFi platform.
Whereas you can only earn 1X tokens for staking on a CeFI or DeFi platform, with CeDeFi, you potentially earn nX amount of tokens, where “n” is multiple tokens or yields that you can earn simultaneously as rewards for staking.
Cross-chain interoperability, in turn, benefits the broader crypto industry by facilitating a smoother transfer of information exchange, easier smart contract execution, more opportunities to forge alliances and partnerships, and an overall user-friendly experience.
CeFi platforms have a similar structure to the traditional financial services companies except that they offer crypto and crypto-related financial products and services. DeFi platforms offer crypto and crypto-related financial products and services but without a centralized intermediary.
CeDeFi blends centralized financial services and decentralized financial products in regulatory-compliant offerings to further derisk the adoption of cryptocurrencies for both retail and institutional users. CeDeFi could further improve the usability of crypto assets by bringing benefits of financial regulations in centralized traditional systems to the emerging world of DeFi while providing users with access to innovative and attractive financial products.
Top Crypto Analyst Says Ethereum-Based DeFi Protocol Primed for Breakout As Binance Coin Targets New Record High
A popular crypto analyst is detailing a set of new predictions for two large-cap crypto assets.
The trader, pseudonymously known as Smart Contracter, tells his 184,000 Twitter followers that Binance Coin (BNB) will likely hit a new all-time high (ATH) well before Bitcoin (BTC) surges above its current record high of $69,044.
“BNB [is] going to send to new ATH from here, probably going to hit it long before BTC does.”
Binance Coin, which is the native crypto asset of the Binance ecosystem, hit its current record high of around $687 in May of 2021 and is trading at $636 at time of writing.
The trader is also bullish on the core crypto asset of the Ethereum-based decentralized finance protocol Curve DAO Token (CRV).
Smart Contracter says that when paired against Bitcoin, CRV appears primed to break out from a 400-day range.
“400-day CRV breakout on the BTC pair underway. I’m ready for the fireworks.”
CRV is trading at 0.00009613 BTC ($5.65) at the time of writing.
Smart Contracter says that the DeFi token is likely on the verge of surging on the Bitcoin chart after an accumulation phase that had lasted over 365 days.
“CRV daily bull flag breakout on the BTC pair plus 12 month+ accumulation. Valhalla awaits.”
Check Price Action
DeFi privacy project Panther raises $22M in 1.5-hour public sale
Panter announced to Cointelegraph on Nov. 25 that it raised $22 million in its recent public sale of ZKP tokens, bringing the total amount raised to $32 million.
Starting on Nov. 23, the Panther Protocol public sale successfully closed in just under 90 minutes, the Panther project previously announced.
Launched in Q3 2020, the Panther Protocol is built using zk-SNARKs, a new form of zero-knowledge cryptography implemented for popular privacy-focused cryptocurrencies like Zcash (ZEC). The acronym “zk-SNARK” stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” referring to a situation where one can prove possession of certain information without revealing that information.
Building on multiple blockchains including Ethereum, Polygon, Flare, Near and Avalanche, Panther is developing an interoperable privacy layer for DeFi and Web3. The protocol uses zAssets, 1:1 backed representations of the underlying assets offering users benefits of private transactions in the new asset type.
As previously announced by Panther, the protocol’s public sale involvea 5% of the total ZKP supply with “varying unlocking schedules.” 15% of the total supply was sold via pre-seed, seed and three subsequent private sale rounds. According to Panther, the protocol has raised $10 million through private funding.
Some of the supposed investors that were willing to participate in Panther’s $22 million public sale have complained about not being able to proceed with payment.
“Shocking support on the Discord, was on the site for 90 minutes and wouldn’t let me make a single payment because the buttons didn’t work, then no response for an hour from anybody in the discord,” one supposed investor reported.
Button did not work but everything else when you send your details ID and pictures works well through your mobile phone. So where is the justice now when we wait in line, registered KYC and all that things and now we have no chance to buy it! pic.twitter.com/b4IWR42eMk— Maro Pagi (@MaroPagi) November 23, 2021
The Panther project did not immediately respond to Cointelegraph’s request for comment.
Related: Polkadot-based privacy project Manta Network raises $5.5M
Amid a major rally on wider cryptocurrency markets, the DeFi industry has continued booming this year, with the total value locked across all DeFi protocols hitting a new record high above $270 billion in early November.
Source: DeFi Llama
In line with DeFi’s growing popularity, industry projects have been increasingly working on privacy solutions. According to Paolo Guida, head of investments for Blockchain Valley Ventures, privacy is the biggest challenge preventing DeFi lift-off.
DeFi Development Tools to Pay Attention To
Here are infrastructure projects aimed at supporting traditional businesses and emerging blockchain projects
The world of Web 2.0, based on the internet and characterized by centralization, is quickly changing into Web 3.0, based instead on the blockchain and characterized by its inherent decentralization. DeFi, GameFi, and SocialFi are all part of this incredible new world. Although the momentum and development of Web 3.0 is strong, it’s still in its early stages, and right now the construction of traditional business on the platform is the primary goal.
Currently the blockchain encounters certain problems, such as inadequate performance and an insufficient amount and quality of functions. With the continued progress of Ethereum 2.0 and the ongoing improvement of emerging public chains, performance problems on the blockchain are gradually being solved. However, there are still many shortcomings in the current functions. The difficulty for traditional business to migrate to the chain at a low threshold is one of such issues plaguing the current model. Functions that exist on the current internet such as collaboration and governance meet the requirements of traditional businesses. Governance in particular only supports voting. So infrastructure projects have been developed to support the operation, collaboration, and construction of traditional businesses and emerging blockchain projects. This article will briefly introduce those.
Encentive: Making DEX Construction Easier
Encentive is committed to bridging the blockchain operation model from Web 2.0 to Web 3.0, building an ecosystem of freely circulating assets through multi-directional modules and components. The project will help communities, projects, users, and even traditional businesses quickly and efficiently acquire operational capabilities such as fission marketing. Encentive itself offers a large number of decentralized operation tools, including Layer 2 nodes, an operation tool template library, DAO governance, Encentive UI, Encentive SDK, and more.
Through Encentive UI and Encentive SDK, developers will enjoy a low threshold for building new applications, or migrating existing applications to the chain. Via functions provided by Encentive and the graphical interface of DAO governance, developers can directly use operational functions while simultaneously interacting directly with contracts so that only a small amount of code is needed to integrate operating modules into existing Web 3.0 applications. Through Encentive’s DAO governance module, a customized governance framework can be built which includes basic DAO functions such as asset management, voting contract management, and authority management.
Encentive provides in-depth operation support. The project is capable of customizing commonly used project team operation functions such as point tasks, cross-chain burning, project promotion, staking, and embedding into the DAO framework- all according to specific project or business needs and characteristics. By combining with the Web 3.0 resource market, it also meets the needs of project teams for the development of customized operation functions and obtains external promotional resources.
Encentive itself is built on Ethereum, and further improves efficiency and reduces transaction costs through Layer 2 technology. Encentive has further reduced the obstacle of acquiring customers in the early stages of traditional businesses and emerging blockchain applications, and has significantly reduced the pain points of operating on such high thresholds. Encentive will further reduce the development threshold of these applications to promote the progress of Web 3.0
Additionally, Encentive can also provide developers with tools to develop their DEX by providing them with components.
Encentive provides a simple solution to developers for the creation of a DEX.
Since Encentive provides users with audited smart contracts as well as functions such as cross-chain burning, staking, and DEX creation, B-end users only need to invoke the corresponding contract to complete operations, including issuing a DEX.
In Encentive V2.0, Encentive will launch the DEX publishing function. By doing so, developers on the B side only need to follow Encentive’s prompts to enter the name of the new DEX, platform currency, platform logo, and the initial trading pairs to be included, as well as initial liquidity. In a few simple steps, developers can create a smooth functioning and attractive DEX.
By using Encentive, the period of time required to develop a DEX has dropped to less than ten minutes.
NULS: More Inclined to “Chain Creation”
NULS, the veteran blockchain technology, and its ecology was in its infancy as early as 2017. NULS is still regarded as one of the technologies facilitating Web 3.0 and is inclined towards “chain creation”.
As a customizable blockchain infrastructure, NULS is committed to building a multi-chain parallel and value-interconnected blockchain ecological network.
NULS features services such as smart contracts, microservices, rapid chain creation, cross-chain interoperability, and asset insurance. Even users without a sturdy code foundation can create a customized blockchain through Chain Factory and NULS’ ChainBox, easing the convenience of the creation of proprietary blockchains for many enterprises.
The NULS community also introduces microservice thinking in the design of the underlying infrastructure of the blockchain, designing software applications as independently deployable service suites, and introducing the most advanced ideas of the architecture design into the module, so that modules act as programs that start independently and are overall very flexible. Under this architecture, the coupling between modules is smaller. Multi-language development greatly improves the contribution of the code and the convenience of the users. At the same time, it is easier to expand and add on to. The modules even support distributed deployment, and the plugging and unplugging of modules is convenient and easy.
NutboxDAO: DAO Operating System for Web 3.0
Nutbox consists of three main sections: crowd-staking, governance, and DAO services. Nutbox provides developers with a series of open source plug-in systems which are highly flexible and extensible, and which adapt to DAOs in different Web 3.0 scenarios. Crowd-staking is a way to empower DAO value based on the staking economy. Holders of pledged assets can vote for community nodes or delegate the right to use pledged assets to the community to obtain DAO tokens.
Modern DAO can carry out DAO governance through the community proposal system and the community committee. This governance model effectively utilizes the advantages of decentralized governance and committee governance. DAO services are driven by the foundation, and the DAO flourishes and even incubates completely supported service function products to provide services to community members and other users.
Loopring Protocol LRC: Of Recent Interest and Gaining Steam
LRC is a DeFi infrastructure technology belonging to an established project. The Loopring protocol uses zero-knowledge proof technology to solve the bottleneck of Ethereum’s low throughput and high costs, allowing anyone to build high-throughput low-cost, non-custodial, order book-based decentralization on the Ethereum trading platform.
Loopring’s DEX supports traders in accurately analyzing K-line charts, order books, price trends, and set prices. With the improvement of performance and experience, as well as transactions done on decentralized exchanges, the Loopring protocol can provide services such as mortgage lending, asset issuance, and contract transactions the likes of which are seen on centralized exchanges. Many traditional businesses are expected to build their own DEX through the LRC protocol to further develop their business. Of course, the Looopring Agreement also needs to be used in conjunction with other technologies to meet such demands.
The above-mentioned infrastructure tools have their own strengths, but when compared with these tools we see that Encentive can provide the most extensive and comprehensive support in both development and operation, and is a promising infrastructure ecosystem. The technologies and tools of Web 3.0 are in a state of constant improvement, and it’s therefor foreseeable that traditional businesses built on the blockchain will also receive more and more in-depth support.