Why Are CEXs Racing Into DeFi?

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The expansion of centralized exchanges (CEXs) into on-chain services is more than just a defensive play — it’s a strategic bet on the future of the crypto ecosystem. Major platforms like Bybit, Binance, and Coinbase are no longer passive observers of decentralized finance (DeFi); they’re actively shaping its evolution through hybrid models collectively known as CeDeFi — a fusion of centralized infrastructure and decentralized innovation.

This shift raises a critical question: Why are CEXs, long reliant on stable, revenue-generating business models, diving into the volatile world of DeFi? The answer lies in shifting market dynamics, user behavior, and long-term ecosystem control.

The CeDeFi Shift: What Are CEXs Actually Building?

While often grouped under the umbrella of “CeDeFi,” each major exchange is taking a distinct approach in architecture, asset custody, and user experience. Understanding these differences reveals their unique strategic priorities.

Bybit’s ByReal: Bringing CEX-Level Liquidity On-Chain

In June, Bybit launched ByReal, a Solana-based DeFi platform designed to replicate centralized exchange-level liquidity in a decentralized environment. It combines a Request-for-Quote (RFQ) system with a Concentrated Liquidity Market Maker (CLMM) model to optimize pricing and reduce slippage — key advantages typically associated with CEXs.

Unlike traditional DEXs, ByReal sources quotes from professional market makers before execution, ensuring better price discovery. Meanwhile, CLMM concentrates liquidity around active trading ranges, boosting capital efficiency.

Users retain control of their assets via self-custody wallets like Phantom. The platform also includes a token launchpad and yield-generating features such as the Revive Vault and $bbSOL staking products.

👉 Discover how next-gen liquidity models are redefining DeFi access.

ByReal’s core strategy? Create a parallel liquidity layer for early-stage tokens that may not meet Bybit’s main exchange listing standards, but can thrive in a community-driven, open environment. It differentiates itself by integrating launch, trading, and yield services into one comprehensive offering.

Coinbase: A Dual-Track Strategy for Retail and Institutions

At its 2025 crypto conference, Coinbase announced plans to integrate DeFi trading directly into its primary app, eliminating the need to switch to a standalone wallet. This seamless experience allows users to trade thousands of tokens immediately upon minting — all within the familiar Coinbase interface.

While DeFi access is already possible via Coinbase Wallet, the new integration lowers barriers significantly for mainstream users.

More notably, Coinbase introduced Verified Pools — liquidity pools restricted to KYC-verified institutional participants. This creates a compliant, secure environment for regulated entities like hedge funds or asset managers to engage in DeFi without compromising oversight.

This dual-track model enables Coinbase to serve both retail and institutional markets effectively:

The result is a balanced approach that maintains compliance while expanding reach.

Binance Alpha: Simplifying Web3 for Mass Adoption

Among the three, Binance Alpha is the most retail-focused. Accessible via a tab within the Binance app, Alpha allows users to trade early-stage tokens without leaving their existing accounts or managing private keys.

All transactions occur on-chain, but interaction happens through the centralized Binance interface — dramatically reducing the learning curve for Web3 newcomers.

Alpha also leverages Alpha Points, a reputation and engagement system that rewards active users with targeted token airdrops. While some tokens listed on Alpha have experienced post-launch price drops — sparking debate over fairness and intent — the platform undeniably accelerates access to innovation.

Binance’s goal is clear: lower the门槛 to Web3 participation by abstracting complexity while maintaining brand trust.

Why Are CEXs Moving Into DeFi? Key Strategic Drivers

1. Capturing Early-Token Opportunities and Avoiding Listing Delays

New tokens increasingly debut on decentralized exchanges (DEXs), where permissionless listings and viral attention drive rapid volume growth. However, CEXs face regulatory hurdles, compliance checks, and internal review processes that delay official listings — even when demand is evident.

This lag creates real opportunity costs:

To bridge this gap, platforms like ByReal and Binance Alpha act as semi-sandboxed environments. They allow trading of early tokens without formal listing, enabling CEXs to:

It’s a win-win: exchanges participate in token discovery while deferring full regulatory exposure.

2. Keeping Users On-Platform and Preventing Churn

Despite DeFi’s innovation edge, most users find it intimidating. Managing wallets, approving contracts, paying gas fees — these friction points push casual traders back to CEXs.

But here’s the catch: the most exciting opportunities (new launches, high-yield strategies) are happening on-chain.

CEXs are responding by embedding DeFi access directly into their apps. Whether through integrated DEX routing or native launchpads, they’re making on-chain activity feel like Web2 — simple, familiar, and safe.

This does two things:

  1. Prevents user leakage — traders stay within the CEX ecosystem even when using DeFi.
  2. Strengthens platform lock-in — by controlling access and liquidity layers, CEXs build network effects beyond spot trading.

Over time, this creates a closed-loop economy: fiat onboarding → DeFi exploration → token listing → profit-taking — all within a single, revenue-generating ecosystem.

👉 See how integrated platforms are reshaping user journeys in crypto.

The Future of CeDeFi: Trends to Watch

Blurring Boundaries Between Exchanges and Protocols

As CEXs integrate on-chain services, the line between “exchange” and “protocol” is fading. A user trading on ByReal might not realize they’re interacting with a decentralized smart contract — nor does it matter to them.

This convergence could reshape liquidity distribution, product design, and user flows across the industry.

Institutions remain cautious due to unresolved risks — regulatory uncertainty, smart contract vulnerabilities, price manipulation — so mass adoption isn’t imminent. Early movers will likely be hedge funds and proprietary trading firms testing small allocations.

But even modest inflows (in the hundreds of millions) could improve market depth and reduce volatility over time.

The Evolving Role of Exchange Tokens

Exchange-native tokens like BNB are transitioning from simple fee-discount tools to strategic ecosystem assets.

In mature CeDeFi environments, holding a platform’s token could unlock:

BNB already plays an active role across Binance’s ecosystem. Others may follow suit — especially platforms building proprietary blockchains (like Coinbase’s Base) or differentiated DeFi layers.

For exchanges without native tokens, launching one could become essential to support CeDeFi integration.

These tokens are becoming glue assets — binding together centralized and decentralized experiences, enhancing user retention, and enabling cross-platform capital flow.

A New Competitive Landscape: Integration Over Disruption

CEXs aren’t viewing DeFi as a threat anymore — they’re absorbing it. The likely outcome isn’t competition, but convergence.

Major exchanges will operate semi-decentralized networks where independent DeFi protocols either integrate or become dependent on CEX-led ecosystems. Power and liquidity may increasingly concentrate around these hybrid hubs.

We’re moving toward a unified market where liquidity flows freely between centralized and decentralized realms. Users will choose based on their preferred balance of convenience, transparency, and control.

Bybit’s ByReal might be just the beginning — a signal of a hybrid future where CeDeFi becomes the dominant paradigm.

Frequently Asked Questions (FAQ)

Q: What is CeDeFi?
A: CeDeFi stands for Centralized-DeFi integration — it refers to CEXs offering on-chain services like DEX trading, token launches, or yield products through centralized interfaces or affiliated platforms.

Q: Are CeDeFi platforms truly decentralized?
A: Not entirely. While transactions occur on-chain and users often self-custody assets, many aspects (like access control, curation, or interface logic) remain centralized. They blend decentralization with CEX-grade usability.

Q: Do I need a wallet to use Binance Alpha or ByReal?
A: Binance Alpha abstracts wallet management — you use your existing account. ByReal requires a Web3 wallet like Phantom for self-custody and interaction with smart contracts.

Q: Can CEXs list any token on their DeFi platforms?
A: No formal listing is required for CeDeFi platforms, but tokens are often vetted or curated to maintain brand safety and mitigate risk exposure.

Q: Will CeDeFi replace traditional DEXs?
A: Unlikely. Traditional DEXs will still serve users prioritizing full decentralization and permissionless access. CeDeFi targets mainstream adoption by simplifying the experience.

Q: How do exchange tokens benefit from CeDeFi?
A: They gain new utility — such as staking rewards, fee discounts on chain, or early access to launches — making them core assets in vertically integrated ecosystems.

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👉 Explore how leading platforms are merging centralized ease with decentralized potential.