CeDeFi taking shape? Binance's all-in-one financial management platform, Earn, integrates DeFi, Staking, and other products.

DeFi has taken a significant portion of business from centralized exchanges (CEX) this year. In April, we compared the interest rate products of DeFi decentralized finance and CeFi centralized finance. Following the emergence of liquidity mining, decentralized coin exchange platform Uniswap even briefly surpassed mainstream exchanges in trading volume.

Additionally, essential wallet for DeFi participants, MetaMask, reported a fourfold increase in monthly active users from April to September, reaching one million users.

Under pressure from DeFi, CEX not only actively lists DeFi tokens but also introduces more high-yield products and bridges DeFi with DeFi-like products to counteract the outflow of users and funds.

Arjun Balaji, a partner at the renowned investment firm Paradigm, predicts: "As DeFi continues to gain structural importance, CeFi and DeFi will merge in a scenario where market participants, liquidity pools, and product usage experiences overlap." He refers to such products as "CeDeFi."

Advertisement - Please scroll down for more

Binance Launches "Earn": A One-Stop Comprehensive Financial Management Solution

The Chinese name for Earn is quite straightforward: Binance Earn.

Binance has integrated several previously launched products onto the same page, where users can choose from: Flexible Savings, Locked Savings, Launchpool, Asset Management, and Dual Investment. Additionally, the original Binance Savings page still exists, but its products are also displayed within Earn.

1. Flexible Savings

As of the deadline, the Flexible Savings products are divided into "General" and "Launchpool" types. The "General" type follows a model where you earn the same currency you deposit, while the "Launchpool" type allows you to earn multiple currencies.

For the "General" type, the top three annualized interest rates are DAI 4.2%, USDC 3.97%, and USDT 3.87%.
For the "Launchpool" type, the annualized interest rates range from 16% to 50%.

It's worth noting for the "Launchpool" type, using the product with a 44.75% annualized interest rate by depositing BNB as an example. In reality, users receive 34.98% BEL, 9.63% WING, and 0.12% BNB interest on their deposit. Apart from BNB, the other two tokens are limited tokens with a 30-day reward period. Since the daily distribution of tokens is limited, the more funds you contribute, the lower the percentage you can receive based on your fund's proportion.

2. Locked Savings

As of the deadline, Locked Savings in Earn are categorized into four types: Binance Savings, Staking, DeFi Mining, and Activities. Regardless of the names, all involve locking a certain token for a period and receiving interest in the same token.

The interest rates for Binance Savings are higher than Flexible Savings, with BUSD, USDC, and USDT ranging from 6.31% to 7% for periods of 7/14/30/90 days.

Staking involves PoS coins as the core, with lock-up periods ranging from 7 to 90 days and annualized interest rates ranging from single digits to nearly 50% for various coins. It's important to note that the redemption processing time for BAND is 7 days.

Regarding DeFi Mining, the product essentially allows users to participate in DeFi products without external fees. Users' tokens can be utilized in Curve, Compound, and Kava, offering interest rates between 12% and 16% for BTC, BNB, BUSD, USDT, and DAI. Currently, only BNB and DAI are open for participation.

Activities offer higher interest rates for locked tokens but have short-term interest accrual periods with quantity limitations, mostly serving as a marketing strategy.

3. Launchpool for New Coin Mining

This product is more like a method for reducing the circulation of Binance ecosystem tokens while boosting the popularity of new coins. By locking BNB, BUSD, and SXP, all within the Binance ecosystem, users can acquire new coins. Described as "farming," it seems to resemble liquidity mining in DeFi, but in practice, it's more akin to high-risk, high-return DeFi mining platforms: you lock A coin to receive B coin.

For instance, with the recent Venus XVS, locking BNB can yield an annualized interest rate of 147.2% in XVS, but the period is only 30 days, potentially longer-lived than some high-risk DeFi mining platforms.

4. Asset Management

Within this section, there are two products: Liquidity Mining and Dual Currency Investments.

Liquidity Mining essentially combines Uniswap's dual-token liquidity pools with the emerging single-sided liquidity. Available pools include BUSD/USDT, BUSD/DAI, USDT/DAI, and USDC/USDT, where users can provide dual-sided liquidity or choose one side. Except for the USDC/USDT pool with a token ratio of 1:1.16, the other pools are unequal, requiring attention to impermanent loss (IL). Opting for single-sided liquidity may incur more impermanent loss.

Dual Currency Investments is a type of option derivative where users can invest in BTC, USDT, and BUSD. After a certain period, users receive fixed returns based on the agreed price. However, there are currently no active products. A new batch was launched on 10/7, which is also available on Matrixport, offering a wider selection and ongoing availability.

Analysis

Under the impact of DeFi, Binance is moving towards a more comprehensive solution as described by Arjun Balaji, aiming for a CeDeFi approach: a complete Ethereum Virtual Machine-compatible blockchain that can port DeFi, such as Binance Smart Chain.

However, until the Binance Smart Chain ecosystem matures, Binance continues to mimic all available products in the cryptocurrency industry on its exchange, likely to attract all potential users, both within and outside the industry.

For investment-oriented users, in the current scenario of low DeFi interest rates and high fees, Binance may provide decent profits. It also offers an alternative for users unfamiliar or interested in DeFi. However, for DeFi users who value decentralization, Binance's indirect DeFi products may not be ideal but somewhat fit the CeDeFi concept. Nonetheless, there is still a long way to go in improving capital efficiency, as mentioned by Arjun Balaji.