Cryptocurrencies

Centralized Cryptocurrency Exchanges (CEX) Remain Key to Attracting More Users

Centralized cryptocurrency exchanges (CEX) remain key to attracting more traditional retail users as the industry recovers from the infamous collapse of the FTX exchange.

Despite the collapse of the FTX exchange, which resulted in a loss of at least $8.9 billion in user funds, CEXs remain the first level of interaction for retail users purchasing their first crypto- cash.

The next 100 million retail users will likely join the industry through cryptocurrency exchanges, according to Ruslan Fakhrutdinov, founder and CEO of cryptocurrency trading platform X10. Speaking exclusively to Cointelegraph, Fakhrutdinov said that centralized exchanges are likely to drive user adoption:

“Centralized exchanges will lead the game for now. However, when you get a new hashrate in the space, it is much easier to move a user from a centralized exchange to a hybrid exchange, rather than bringing in a completely new user.

The main reason new investors choose CEX exchanges is the element of trust in the underlying company, coupled with a more intuitive trading experience.

Fakhrutdinov explained that to attract more traditional retail investors, hybrid and decentralized exchanges require an improved user experience and renewed marketing efforts:

“Hybrid exchanges seek to localize cryptocurrencies. To attract regular retailers, their approach to marketing needs to be a little different. “It should be more like ordinary research centers than (specific) cryptocurrencies.”

X10 positions itself as a hybrid exchange and was founded by team members who previously worked at neobank Revolut. Its infrastructure includes a hybrid central order book that performs on-chain trade settlements through StarkEx’s Layer 2 engine.

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Hybrid Cryptocurrency Exchanges Can Rebuild Trust After FTX Collapse

Unlike the decentralized philosophy of Bitcoin (BTC), cryptocurrency exchanges (CEX) are controlled by a central party or company, creating third-party vulnerabilities.

Despite the emergence of alternatives such as decentralized exchanges (DEXs) and hybrid exchanges, CEXs control the majority of cryptocurrency trading volume.

According to Dune, the cumulative trading volume on DEXs reached a total of $3.56 billion over the past 24 hours, four times less than the $15.1 billion trading volume accumulated by Binance, the largest CEX exchange in the world.

DEX metrics, 24 hours. Source: Dune

Hybrid exchanges emerge as a compromise between CEX and DEX exchanges, combining the workflow and trading expertise of centralized exchanges with the non-custodial elements of decentralized exchanges.

Hybrid exchanges could help restore confidence in the cryptocurrency sector, following the collapse of FTX, according to Fakhrutdinov, who explained:

“Right now, I would say the next generation of (cryptocurrency) exchanges should be trustless but not necessarily permissionless.”

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Robinhood’s acquisition of Bitstamp is a positive sign for institutional adoption

On June 6, stock trading app Robinhood announced the purchase of cryptocurrency exchange Bitstamp in a $200 million deal, allowing the app to serve institutional clients in the USA.

Fakhrutdinov explained that, coupled with Revolut’s launch of its own cryptocurrency exchange, these are net positive signals for institutional adoption of cryptocurrency, which will drive more “retail flow” into the industry:

Ruslan Fakhrutdinov, CEO of x10, interviewed by Cointelegraph. Source: Cointelegraph

Popular global neobank Revolut first launched its cryptocurrency exchange for UK users in early May.

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