TKO x CeDeFi: Ascending the Crypto Stairway to Financial Utopia
The genesis of the modern day central banking framework can be traced back to the establishment of the Swedish Riksbank as a joint stock bank in 1668 and since then centralization has been the standard operating procedure in the financial world. Fast forward to 2021, all 145 countries in the world except for 9 of them have a central bank to manage their respective national fiscal policies. The penchant for centralization stretches beyond the financial domain to encompass that of securities investment whereby only 26 countries do not have a national stock exchange which supports their respective centralized securities market through which trade orders are routed. In many ways, the centralized mode of operations of the financial and securities markets which entails the accumulation of control in the hands of a central entity controlled by a select few is antithetical to the idea of democracy which incorporates the values of transparency and notion of collective will.
Theoretical considerations aside, the dangers of centralized mode of operations was aptly illustrated by the LIBOR scandal back in 2012 which involved bankers at several major financial institutions including Deutsche Bank (DB), Barclays (BCS), Citigroup ©, JPMorgan Chase (JPM), and the Royal Bank of Scotland (RBS) colluding with each other to manipulate the London Interbank Offered Rate (LIBOR) whereby there was evidence to suggest that the collusion has been ongoing for almost a decade by the time it was discovered dating back to early 2003. It was against this contextual backdrop that decentralized finance (DeFi) came about to offer a much needed alternative to the centralized model of the conventional financial system whereby the global hunger for an alternative financial modular framework is reflected in the meteoric rise of DeFi which as of the middle of October 2021 has crossed the USD200 billion mark.
CeFi and DeFi: Two Sides of the Crypto Coin
Lest it be thought that centralized mode of operations is uniquely exclusive to the conventional financial system, it should be noted that the element of centralization also traverses the cryptocurrency domain in the guise of centralized finance (CeFi) which entails the processing of cryptocurrency transactions by centralized exchanges. In a way, the role played by centralized exchanges renders CeFi to be arguably a departure from the decentralization ideals of blockchain as blockchain networks are supposed to operate in a trustless manner without the need to trust any entities. In this regard, the custodial nature of centralized exchanges means that the users of these exchanges would have to repose a certain degree of trust in the centralized exchanges of their choice which in turn renders CeFi to be a conceptually aberrant in terms of complying with the decentralization ideals and trustless feature of blockchain.
In contrast as its name suggests, DeFi operates in a decentralized manner through the provision of financial services using decentralized applications (dApps) which are deployed through blockchain networks. The decentralized nature of DeFi stems from the fact that the network of a dApp is maintained by a distributed network of computer-nodes as opposed to a single centralized server which renders DeFi to embody not only the decentralization ideals of blockchain but also the trustless feature of the technology. On the flip side however, although the decentralized nature of DeFi dispenses with the single point of failure (SPOF) risks associated with CeFi, the wide distribution of participating nodes renders DeFi networks to be vulnerable to hackers and cyberthieves as evidenced by the fact that fraud and hacks involving DeFi networks resulted in a total loss of USD474 million in the first half of 2021 alone with the biggest contributor being the flash loan attack targeted at PancakeBunny in May 2021 which resulted in a loss of USD45 million to BUNNY token investors. Additionally, the absence of a centralized entity renders DeFi investors to be particularly susceptible to the risks of exit scams, notably in the form of rug-pulls with a notable case occurring back in April 2021 involving Turkish cryptocurrency exchange Thodex which caused losses amounting to USD2 billion.
While the jury is still out with regard to the question as to whether CeFi or DeFi offers a better mode of delivery for the provision of financial services, what is clear is that both CeFi and DeFi have their respective pros and cons. As the famous saying by Aristotle goes “the whole is greater than the sum of its parts”, accordingly the path to financial utopia may lie in the deployment of cryptocurrency in a manner which harnesses the strengths of CeFi and DeFi while dispensing with their weaknesses to create an additional holistic and all-encompassing alternative concept whereby this is precisely what Binance did.
Toko Token (TKO): The Perfect Embodiment of CeDeFi
In September 2020, Binance (which is the world’s largest cryptocurrency exchange in terms of trading volume) launched Binance Smart Chain (BSC) with the aim of integrating DeFi functionalities with its centralized exchange. With this, the concept of CeDeFi was born and Binance gave the concept a head start by establishing a USD100 million seed fund to support the integration between DeFi projects with Binance’s centralized platform. The central tenet of CeDeFi is that it enables a centralized exchange to take on the responsibility of vetting DeFi tokens and projects thereby enabling users to participate in multiple DeFi tokens and projects in a secure and simultaneous manner. The immense potential of the concept of CeDeFi is aptly illustrated by the fact that as at the end of the third quarter (Q3) of 2021, BSC’s total value locked (TVL) of USD17.78 billion is second only to Ethereum’s TVL of USD125.58 billion.
Right from the get-go, TKO has embodied the concept of CeDeFi by virtue of the fact that it is a BEP20 token which operates on BSC’s network. With regard to CeFi, TKO is issued through our Tokocrypto 2.0 centralized platform which is powered by Binance Cloud, an infrastructure solution for customers and partners to launch digital asset exchanges using Binance’s industry-leading technology, security and liquidity. As for the aspect of DeFi, TKO can be staked on DeFi platforms namely BiSwap, PancakeSwap, Autofarm and Moonfarm thereby affording TKO holders the opportunity to earn themselves some passive income through the staking of their TKOs. Moving forward, Tokocrypto will be looking to add more staking options for TKO holders in line with our policy of encouraging the staking of TKOs in order to enable TKO holders to capitalize on the long term capital growth prospects of TKO which is set to be driven by the development of more functional use cases for the token in time to come.
With its unique hybrid token model which combines the best of CeFi and DeFi, TKO is set to leverage CeDeFi as a crypto stairway to reach the promised land of financial utopia.
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