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- POST-FTX: THE MARKET REDISCOVERS THE REAL VALUE OF DECENTRALIZATION
POST-FTX: THE MARKET REDISCOVERS THE REAL VALUE OF DECENTRALIZATION
Built on the ideals of decentralization and absolute autonomy, the crypto market has inadvertently become centralized under the influence of major exchanges. This was "ignored" by the community during the bull period, and was just only realized after the collapse of FTX - the world's 3rd largest exchange, causing the market to immediately go back to finding the true value of decentralization.
Crypto and blockchain are built on the ideals of true personal ownership, autonomy, and decentralization, as a solution to the 2008 financial crisis. Its first and foremost goal is to be completely different from the financial system which is centralized to the maximum. However, during the bull period, the size of the large centralized exchanges also increased, and with their business strategies and large resources, a few top CEX exchanges quickly controlled a significant amount of assets in the market, enough to manipulate or worse, bring down the entire market if any of the above pillars collapse.
FTX was one of those pillars, and when it collapsed, it reminded people of Lehman Brothers - the 4th largest bank in the United States and a symbol of the 2007-2008 financial crisis. The irony is that FTX and Lehman Brothers represent two completely opposite forces, but both ended up in a similar way and with the same results. This coincidence really makes one wonder, is crypto truly decentralized, and what has happened to this core value of the market?
At its peak, FTX was valued at $32 billion, with an average daily trading volume of $14 billion, more than all decentralized exchanges (DEXs) combined. With such a scale, the collapse of FTX has pushed many companies and projects to bankruptcy, and dragged the crypto market capitalization below 1 trillion dollars, entering an even colder “winter” period. Binance, the largest exchange in the world by all means, is even bigger than FTX. According to a metric randomly picked up by The Block on October 24, 2022, spot trading volume on Binance accounts for more than 55.1% of total market volume, and derivatives trading on Binance accounts for 54. 5% of the total market.
While it may or may not be possible for every exchange including Binance to illegally access and use user assets like in the case of FTX, the risk has never been zero, and with an entity the size of Binance , any wrong move can cause extremely huge losses to the market, and affect tens of billions of dollars in users' assets. Furthermore, entrusting your assets to an exchange will require your "trust", breaking the "trustless" nature of the blockchain. And the solution to this problem is the axiom that blockchain and crypto have made since the beginning, and the core value it is built on - Decentralization, absolute autonomy!
After FTX, the cash flow immediately shifted significantly to DEX exchanges and crypto wallet projects. This shows that the market has taken initial steps towards decentralization as a safe haven solution. DeFi has grown, and the technology gap between DEX and CEX exchanges is shrinking. We have every right to believe that, in the not too distant future, crypto will no longer be threatened by the next FTX thanks to the growth of decentralized finance.
At BHO Network, the team has always put the element of decentralization first, and is utilizing it seriously. 3S Wallet, one of the core technology products of the BHO Network ecosystem, was developed to promote decentralization, as well as true ownership.
3S Wallet is a multichain wallet developed based on 3 criteria: Simple - Secure - Safe, aiming for full completion in terms of technology, security and user experience. Besides the basic features, 3S Wallet also focuses on promoting many other advantages such as user-friendly custom interface, easy on-ramp payment with Moonpay, quick swap with low slippage rate, etc. to enhance the user experience, and at the same time contribute to narrowing the gap between DeFi and CeFi, and promoting greater DeFi adoption by users.
The FTX incident has served as a wake-up call, reaffirming the importance of decentralization for the sustainable development of the cryptocurrency market. 3S Wallet, like every other DeFi application, will continue its work to reduce the dependence on intermediaries, ensuring transparency and decentralization for the blockchain industry.
Published on December 12, 2022
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