Centralized Exchanges Will Become Gateways for DeFi: Finance Redefined

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

The past week in DeFi has seen further advances in zero-knowledge proofs (ZK proofs) as a scaling solution as more DeFi protocols embrace the technology.

A new DeFi bill from the US Senate has drawn a lot of scrutiny – though not necessarily of the positive kind – as many stakeholders have come forward to criticize the “unenforceable” legislation.

The CEO of the Dydx Foundation made a bold prediction that centralized exchanges will eventually become a gateway for DeFi, while Polygon 2.0 laid the foundation for decentralized governance.

The top 100 DeFi tokens had another mixed week of highs and lows, with most tokens continuing to trade within the same range as the previous week.

Centralized exchanges will become gateways for DeFi – DYdX Foundation CEO

The dYdX Foundation – an independent DeFi nonprofit founded 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 imminent launch of mainnet v4, which the foundation says represents complete decentralization for dYdX.

As Cointelegraph recently reported, the July 5 testnet launch represented the fourth of five dYdX milestones set out in its 2022 roadmap to decentralization.

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Polygon 2.0 lays the foundations for decentralized governance

Polygon Labs has begun work on an extension intended 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 revamping the governance mechanism for the upcoming Polygon 2.0 roadmap to establish multiple Layer 2s on the network.

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Coin Center and Blockchain Association Slam US Senate’s DeFi Bill “Unenforceable”

Crypto industry advocacy bodies have criticized a new US Senate bill for what they say is a confusing approach to regulating the DeFi sector.

On July 20, crypto think tank Coin Center and crypto advocacy group the Blockchain Association released separate statements describing the legislation as a “messy,” “imworkable,” and “unconstitutional” way to regulate DeFi.

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Chainlink launches cross-chain protocol linking blockchain to TradFi

The development company behind the Chainlink protocol and its native LINK token has released its cross-chain protocol aimed at providing 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 of Chainlink Labs, announced that its cross-chain interoperability protocol has launched in early access on Ethereum, Avalanche, Polygon, Arbitrum, and Optimism.

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DeFi liquidity protocol adds zkEVM rollup developed by ConsenSys Linea

Amid the growing popularity of ZK evidence-based layer 2 scaling solutions, decentralized financial liquidity protocol Symbiosis has added support for Linea, a zero-knowledge Ethereum virtual machine (zkEVM)-based scaling solution for cross-chain swaps developed by ConsenSys.

Symbiosis said in a statement that Linea is a developer-ready zkEVM rollup, which means it is compatible with Ethereum and thus allows developers to reuse much of the existing infrastructure to build multi-asset solutions. Linea includes over 100 protocols, developer tools, and decentralized applications, making it a potentially useful scaling tool for developers in the Ethereum ecosystem.

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DeFi Market Overview

The total market value of DeFi saw a bullish surge after three bearish weeks. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market cap had a bullish week, with most tokens trading in the green. The total value locked in DeFi protocols remained below $50 billion.

Thanks for reading our roundup of this week’s most impactful DeFi developments. Join us next Friday for more stories, ideas and insights into this dynamically evolving space.