Ethereum’s Challenge: How CeDeFi Threatens the Future of Decentralized Finance

In a recent statement, *Zhu Su*, co-founder of *Three Arrows Capital*, expressed concerns regarding the impact of *CeDeFi* on the *Ethereum* ecosystem. He articulated that the prevalence of centralized finance solutions potentially undermines the original vision for Ethereum, which aimed to facilitate decentralized smart contracts across a distributed network. Su emphasized the necessity for Ethereum to pivot towards application scenarios that leverage its strengths in *global distributed computing* and *censorship resistance*. He pointed out that certain use cases, particularly those emphasizing *privacy protection*, embody essential *cypherpunk* values. According to Su, without the effective performance of Ethereum, a resurgence in *Decentralized Finance (DeFi)* may remain elusive. In a landscape marked by low validator decentralization and an insufficient demand for smart contracts, off-chain solutions are likely to dominate due to their inherent cost and efficiency benefits over on-chain alternatives.