Centralized Exchanges Will Become the Gateway to DeFi: Finance Redefined

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insight – a newsletter designed to bring you the most important developments of the past week.

The past week in DeFi saw new advances in zero-knowledge proofs (ZK-proofs) as a scaling solution as more DeFi protocols adopted the technology.

A new United States Senate DeFi bill attracted a lot of scrutiny – though not necessarily of the positive kind – as several stakeholders came out to criticize the “impractical” legislation.

The CEO of the DEX Foundation made a bold prediction that centralized exchanges will eventually become a gateway to DeFi, while Polygon 2.0 lays the groundwork for decentralized governance.

The top 100 DeFi tokens had another mixed week of volatility, with most coins continuing to trade in the same range as last week.

Centralized exchanges will become the gateway to DeFi – CEO of DYdX Foundation

The dYdX Foundation – an independent DeFi nonprofit established to support the dYdX protocol – recently launched a public testnet for its latest version, v4. According to the Foundation, this puts dYdX ahead of schedule for the impending launch of the v4 mainnet, which the Foundation claims represents complete decentralization for dYdX.

As Cointelegraph recently reported, the July 5th testnet launch represents the fourth of five milestones dYdX has set in its 2022 roadmap towards decentralization.

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Polygon 2.0 lays the groundwork for decentralized governance

Polygon Labs has begun work on an expansion that aims to include all blockchains and applications running on the Polygon network, and seeks to democratize the upgrade process and encourage community participation.

On July 19, the company’s developers proposed governance improvements for the upcoming Polygon 2.0 roadmap to establish multiple Layer 2 on the network.

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Coin Center and Blockchain Association Call US Senate DeFi Bill ‘Impractical’

Crypto industry advocacy bodies have criticized the newly proposed US Senate bill, which they describe as a confused approach to regulating the DeFi sector.

On July 20, crypto think tank Coin Center and crypto advocacy group Blockchain Association issued separate statements calling the law a “messy,” “impractical” and “unconstitutional” way of regulating DeFi.

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Chainlink Launches Cross-Chain Protocol Connecting Blockchain to TradeFi

The development firm behind Chainlink Protocol and its native LINK token has gone live with its cross-chain protocol, which aims to provide interoperability between traditional financial firms and public and private blockchains.

In a July 17 post on the Chainlink blog, Kemal El Moujahid, Chief Product Officer at Chainlink Labs, announced that its cross-chain interoperability protocol has been launched under early access on Ethereum, Avalanche, Polygon, Arbitrum and Optimism.

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DeFi Liquidity Protocol Adds ConsenSys-Developed zkEVM Rollup to Linea

Amid the growing popularity of layer-2 scaling solutions based on ZK-Proof, decentralized finance liquidity protocol Symbiosis has added support for Linnea, a zero-knowledge Ethereum Virtual Machine (zkEVM)-based scaling solution for cross-chain swaps developed by ConsenSys.

In a statement, Symbiosis said that Linea is a developer-ready zkEVM rollup, meaning it is Ethereum-compatible and thus gives developers the flexibility to reuse a lot of existing infrastructure to build multi-asset solutions. Linea includes 100+ protocols, developer tools, and decentralized applications, making it a potentially helpful scaling tool for developers in the Ethereum ecosystem.

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DeFi Market Overview

DeFi’s total market cap has seen a rally after three bearish weeks. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market capitalization had a bullish week, with most tokens trading in the green. The total value locked in DeFi protocols remained just under $50 billion.

Thanks for reading our roundup of the most impressive DeFi developments this week. Join us next Friday for more stories, insights and education about this dynamically moving space.