Zhao Changpeng discusses DeFi bubble, Ethereum 2.0: I didn't see Ethereum back then, Vitalik proved me wrong

There is no need to elaborate on the frenzy of DeFi since the beginning of this year. Ethereum founder Vitalik Buterin and Binance CEO Changpeng Zhao (CZ) have publicly warned about its risks multiple times. However, with the development of Binance Smart Chain (BSC), not only has BSC started to launch liquidity mining projects, but Binance has also actively introduced DeFi-like products. Recently, the foreign media Cointelegraph conducted an interview with CZ. Has his attitude towards DeFi changed?

Assessment of DeFi Trends

CZ mentioned the current hot trend of DeFi, with intensifying competition to attract liquidity providers, various project parties are employing ever-evolving means, but still primarily focusing on issuing new tokens and providing high returns to holders. Consistent with previous views, CZ believes that this incentive structure cannot be sustained for too long, and he pointed out:

There are claims that many DeFi projects are taking liquidity away from exchanges, but we are still actively listing DeFi tokens, learning from different DeFi models, and introducing products in the centralized financial sector that allow users to earn rewards by staking tokens such as BNB.

Recent Developments of Binance Smart Chain

In the progress of decentralization, CZ stated that Binance has been developing the Binance Smart Chain (BSC) for over a year. Due to its compatibility with Ethereum, developers can easily port from Ethereum to BSC painlessly. To support the DeFi ecosystem, Binance has also initiated a $100 million seed fund for this purpose.

Furthermore, Binance's new product, "Launchpool," has already launched three projects, including Bella Protocol (BEL), Flamingo (FLM), and WING. Other liquidity mining projects have also chosen to operate on BSC, such as BurgerSwap, Bakeryswap, ForTube 2, and Cream, as previously reported.

Thoughts on Ethereum 2.0

CZ holds a high regard for Ethereum 1.0, stating:

Regarding Ethereum 1.0, I underestimated Vitalik. When he talked to me about Ethereum in 2015, I thought they were overreaching, but to my surprise, he proved me wrong. He launched Ethereum, and their team and community have the ability to tackle very challenging technical issues. They are powerful innovators.

However, CZ finds the official launch of 2.0 to be fraught with difficulties, mentioning:

I have high hopes for Ethereum 2.0, but I think there are significant challenges, especially transitioning from PoW to PoS mechanisms, which is a big change. It would be great if they can overcome it this year, but I think real implementation will take some time.

DeFi vs. ICO

CZ stated that in any field, there will always be an initial concept that gains attention, becomes overly hyped, and leads to a bubble. Similar to ICOs, the commonality with blockchain fundraising is the point of a bull market outbreak. He summarized:

Many ICO projects have failed, but a few have succeeded, and Binance is one of them. We became a strong company through ICO. DeFi is a similar situation; many projects have made no progress, but the core innovative technologies in these bubbles will remain, including automated market-making, liquidity mining, and more.