From CEX to CeDeFi: Binance's on-chain "breakout battle" and ambitions

Centralized Exchanges (CEX) are entering deep waters in the competition for the on-chain trading market.

In the new market landscape, Binance is carving out a unique path of integration, building on the “CeDeFi” concept first proposed by its founder Zhao Changpeng (CZ) in 2020. Binance is not merely seeking a simple overlay of CeFi and DeFi, but instead aims to blur the boundaries between the two through technological integration and ecological collaboration, allowing users to seamlessly enter the on-chain world.

On September 1st, Binance launched a web wallet rebate program, offering up to 80% commission on transaction fees. Just a few days earlier, on August 25th, OKX announced that it would charge a “UI service fee” for some trading pairs on its DEX aggregator, while also launching an invitation rebate program.

At that time, Binance founder CZ boldly predicted that “the trading volume of DEX will surpass CEX in the next 3-5 years.” Although he later extended the timeline, the core judgment has never wavered: decentralized trading is an irreversible ultimate trend.

Whether it is the internal competition among traditional rivals or the pressure from the rise of DEXs, it has become inevitable for CEXs to rush to the on-chain battlefield and start a new competition.

However, there seems to be a barrier between centralized trading platforms and the free and open on-chain world. In particular, the complexity of on-chain operations creates a high entry barrier for users, and how CEX can break this deadlock becomes a core challenge. The recent rapid rise of the Binance wallet has provided the industry with a potential solution.

Binance Wallet Breakthrough

The on-chain competition among exchanges is essentially a battle for the entry point into Web3, with on-chain wallets becoming the “lifeline” in the new competitive landscape.

The “explosion” in the mouth of the bluebird is a universal perception. Since the beginning of this year, a well-planned “lightning war” was initiated by Binance, consisting of three trump cards: Alpha 2.0, TGE (Token Generation Event), and the Booster task incentive activities, attracting a large number of users to step into the on-chain world for the first time.

The wealth effect generated by a series of token incentive activities has become the best means to attract users. According to statistics, during the early TGE activities, users participating in token subscriptions for projects like Myshell, Particle, and KiloEx saw peak returns of up to 1130% to 3412%.

At this point, it is important not to overlook Binance's significant brand, traffic, and ecological resource advantages as a leading exchange.

On the user side, Binance itself has a reserve of over 280 million registered users and a long-standing reputation. When it offers early participation opportunities and incentives through activities like Alpha airdrops, it can easily attract a large number of users to participate and create word-of-mouth promotion on social media, gaining more incremental users.

Through Alpha 2.0, Binance has validated the effectiveness of the “Merged Account” system. With the mixed architecture of “on-chain transactions, CEX clearing and settlement,” users can seamlessly traverse between CEX and on-chain, achieving seamless circulation of assets. This innovative solution bridges the gap between centralized and decentralized trading, enhancing user liquidity, capital efficiency, and accessibility. It will undoubtedly accelerate the growth of Web3 users and lay the foundation for connecting traditional finance to digitization.

In CZ's view, future exchanges should achieve unified trading of various global assets, whether it's a building, the future IP revenue rights of a celebrity, or even an individual's net worth, all of which can circulate in the same market. This not only maximizes liquidity but also makes the price discovery mechanism more efficient.

To achieve such a vision, breaking the barriers between CEX and DEX is a necessary path. Binance's practices indicate that future competition will no longer be a dichotomy between CEX and DEX, but rather who can integrate more efficiently and connect seamlessly. It provides a viable path for the entire industry towards CeDeFi and signifies that the competition in crypto financial infrastructure has only just begun.