Centralized Exchanges Remain Dominant Despite FTX Crash, Hybrid Platforms on Rise
Summary:
After the infamous crash of the FTX cryptocurrency exchange, Centralized Cryptocurrency Exchanges (CEXs) continue to be the main gateway for retail adopters. X10 CEO, Ruslan Fakhrutdinov, predicts that the next wave of retail adopters will mainly use CEXs. Meanwhile, hybrid exchanges, combining the user-friendly trading of CEXs with decentralized elements, are emerging and have potential to restore trust post-FTX collapse. Institutional adoption is also on the rise, visible in Robinhood's Bitstamp acquisition and neobank Revolut's launch of a crypto exchange.
Despite the infamous crash of the FTX exchange, which resulted in at least $8.9 billion in user funds being lost, Centralized Cryptocurrency Exchanges (CEXs) continue to serve as the primary entryway for mainstream retail adopters purchasing their first cryptocurrency. Ruslan Fakhrutdinov, the CEO and founder of X10, a cryptocurrency trading platform, made assertions that future adoption by approximately 100 million retail consumers will most likely occur through the medium of CEXs.
CEXs are viewed as more trustworthy by new investors due to their connection to established companies, as well as their user-friendly approach to trading. In order to draw in more typical retail investors, improvements in user experience and reinvigorated marketing efforts are required by hybrid and decentralized exchanges, Fakhrutdinov elaborated.
The X10 platform, which is seen as a hybrid exchange platform, was established by a team that previously worked at neo-bank Revolut. It boasts a hybrid central limit order book that carries out trade settlements on-chain via StarkEx's layer-2 engine.
While the underlying philosophy behind Bitcoin (BTC) promotes decentralization, CEXs are overseen by a centralized authority or organization, leading to potential third-party risks. Yet, even with the advent of new alternatives such as decentralized exchanges (DEXs) and hybrid exchanges, the majority of crypto trading volume is still dictated by CEXs.
Hybrid exchanges, which combine the workflow and trading experience of centralized exchanges with the non-custodial aspects of decentralized exchanges, are emerging as a viable alternative to CEXs and DEXs. Fakhrutdinov believes that these hybrid exchanges have the potential to regain trust in the cryptocurrency sector, after the FTX debacle.
Robinhood's recent acquisition of the Bitstamp crypto exchange for $200 million has been perceived as an encouraging sign of growing institutional adoption. This acquisition will allow the stock trading app to cater to institutional clients in the United States. This development, coupled with the launch of a crypto exchange by Revolut, is seen as a net boon for institutional crypto adoption, likely to attract more “retail flows”, Fakhrutdinov stated.
In May, Revolut, a widely popular global neobank, launched its crypto exchange for UK users.
Published At
6/21/2024 3:45:13 PM
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