In the seven days leading up to November 13, according to CryptoCompare statistics, weekly Bitcoin movements from centralized exchanges had their largest-ever net outflow, with 97,805 coins moving off platforms.
Some staunch believers claim that doubling down on DEX is the solution as the crypto fortress falls. Specifically, decentralized exchanges.
Since Sam Bankman-FTX, Fried’s significant centralized crypto exchange, abruptly collapsed, conventional bankers and investors, have been calling for increased regulation. On the other hand, some cryptocurrency players are emulating the original crypto vision of Satoshi Nakamoto, the person who created Bitcoin, by bypassing the financial middlemen and turning to decentralized exchanges, where traders transact peer-to-peer on the blockchain.
According to data from market tracker DeFi Llama, on Nov. 10, as FTX collapsed, overall daily trading volumes on DEXs, including the likes of Uniswap, jumped as high as $12 billion, their highest level since May. However, gains have since been reversed. According to CryptoCompare, four days later, November volumes had eclipsed the whole previous month.
According to statistics from market tracker DeFi Llama, on Nov. 10, when FTX collapsed, overall daily trading volumes on DEXs, including the likes of Uniswap, jumped as high as $12 billion, their biggest level since May. However, gains have since been reversed. According to CryptoCompare, four days later, November volumes had eclipsed the whole previous month.
In the meanwhile, CryptoCompare data reveals that weekly bitcoin movements from controlled exchanges, or CEXs, saw their largest-ever net outflow, with 97,805 currency moving off platforms in the seven days leading up to Nov. 13.
According to Varun Kumar, CEO of the decentralized cryptocurrency exchange Hashflow, “it is clearly obvious that there might be danger involved with retaining assets in a centralized company.” According to data, customers are increasingly using decentralized trading platforms.
However, DEXs may not always be safer than their centralized competitors, and unskilled investors may be exposed to significant risks. Instead of routing money through a middleman or centralized authority, users may exchange tokens directly with each other using blockchain-based smart contracts.
As a result, just like other decentralized finance (DeFi) or Web3 systems, there is no central authority and, for better or worse, investors are in charge of their transactions, settlements, and coin or token storage.
When compared to traditional exchanges on Wall Street, CEXs like Coinbase, Binance, and FTX operate as intermediaries in transactions, making trading easier for novice investors in particular. CEXs also occasionally provide coin custody services, as did FTX. Many centralized players have also worked to build consumer confidence by more transparent policies including providing evidence of their reserves. Requests for comment from Coinbase, Binance, and FTX were not immediately fulfilled.
