DeFi
Chainalysis report reveals this about centralized vs decentralized exchanges
Posted:
| Last updated: November 13th, 2021
Crypto exchanges are vital parts of the crypto ecosystem. And, to that end, both centralized and decentralized exchanges offer attractions of their own.
Chainalysis’ November research report on the crypto exchange showed what trends are taking shape, and where the industry is headed as a whole.
Exchanging blows
Comparing institutions such as centralized exchanges, DEXes, high-risk exchanges, OTC brokers, and derivatives exchanges, Chainalysis’ report stated,
“Large DEXes grew their transaction volume substantially during the time period studied, as did large OTC brokers and large centralized exchanges.”
It went on to add,
“On the other hand, nearly all small exchange categories regardless of business model saw a decrease in their cryptocurrency received.”
That said, the report claimed derivatives exchanges saw the most growth in terms of their value received, with a surge of more than 680%.
However, Chainlaysis tweeted out that those outside the mainstream might have a harder time staying in the game. It claimed,
“Across all categories however, the number of small exchanges has dropped, suggesting the exchange market can no longer support niche players. The lesson? Exchanges need to reach a mass audience, or a small audience of large-scale traders, in order to stay in business.”
Source: Chainalysis
Traders might also be interested to learn that across the board, May 2021 was the best month for crypto exchanges in value received.
CeFi vs DeFi
Chainalysis observed that DEXs and derivatives exchanges have been seeing strong growth when looking at transaction volumes. The analytics firm suggested this could be due to veteran investors with more assets opting to trade on DEXs while new traders are more likely to go for centralized exchanges. Even so, centralized exchanges saw the most number of transactions.
Source: Chainalysis
Coming to the rise of OTC brokers, Chainalysis’s report said,
“OTC brokers frequently help such users execute extremely large trades that would strain the liquidity of open exchanges or possibly affect prices — the growth of OTCs as a category suggests this may be a growing use case.”
Huobi says bye
On 9 November, Huobi Global announced that it would be winding down services to Singapore-based users and treating the country as a “restricted jurisdiction.” The centralized exchange made it clear that users needed to withdraw their assets soon since accounts would be closed down in early 2022.
This was a surprise to many crypto watchers, due to Singapore’s reputation as a supposedly crypto-friendly country with flexible regulations. However, even Binance made the same decision a few months earlier.
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