Centralized exchanges like Binance and Huobi have ruled the crypto exchange landscape for the long term. Their tokens have been highly valued. Launching tokens in their platforms had become a statement and had an immediate impact on Token prices. However, for most of these exchanges, the days in the Top are numbered. This is an interesting transition period for them to adopt. Like CZ binance said, such exchanges do not want to become another “Kodak”.
The introduction of Uniswap has ushered in a new era in the crypto exchange landscape. The game is changing rapidly and even behemoths like Binance are feeling the heat. I believe that the exchange ecosystem will become a different beast in 2–3 years.
Here are my top 10 predictions of what changes we might see in the crypto exchange landscape.
1. The death of Order books: Automated Market Makers (AMMs) are here to rule. Order book systems had major drawbacks, they were centralized, fees were taken by central parties, and the unavailability of many token pairs. The introduction of AMMs eliminates all these drawbacks.
a. AMMs are non-custodial, you can participate using Metamask.
b. Fees are distributed between the Liquidity Pool providers.
c. In Uniswap any ERC-20 tokens can be traded (provided they have liquidity).
2. Death of IEOs: Centralized exchanges take heft amounts from new projects to list their tokens. AMMs take zero fees, you just need to pay for Gas. All new projects will start to provide their relatively new tokens in the Liquidity Pools.
3. Advanced features in AMMs: We will see advanced featured in AMMs, some of them include :
a. Interoperability
b. Advanced Liquidity mining features, including nft mining
c. Availability of Bonded Curve mechanism for a new token launch
d. Impermanent Loss calculator integrations
4. AMMs in centralized exchanges’ chain: Centralized exchanges will start creating projects in their chains. This has already started with Binance creating Bakeryswap and Pancakeswap. Initially, it will matter very less if such chains are completely centralized, as these chains will have low transaction fees which is the need for the hour. A transaction in bakeryswap takes a few cents.
5. Centralized savings products leverage Decentralized Savings: Binance savings is using Compound’s services to give interests. The only benefit a user gets is the ease of investing. Once a protocol like Compound becomes more user-friendly, they have the potential to give a combined exchange + savings feature.
6. Metamask will be the king: With the introduction of the Mobile App, Metamask has already seen a spike in interest. It also allows an important feature that products like Uniswap do not have, that is Fiat on and Off-Ramp. Once this is expanded, Metamask will become a game-changer. Metamask already integrates with multiple chains and is going to provide a swap feature.
7. Introduction of Crypto Cards: Focus will shift to crypto cards. Centralized exchanges will try to capture areas that Decentralized ones will not be able to do immediately. Crypto.com Cards and Swipe cards have already started seeing some transactions. These cards, integrated with exchange support will be more popular in the future.
8. Centralized exchanges to focus on custody Solutions: With retail users moving to AMMs, centralized exchanges will push forward custody solutions for big companies. We have already seen Square buying Bitcoin. Such a service will promise to take the risk away from the big investors. Coinbase is a pioneer here.
9. The movement to AMMs to layer 2: Honeyswap in the xDai chain is a good example. Bridge solutions will become popular. Reddit is already searching for an Ethereum Layer2 solution to launch its Moon tokens. Such solutions will be less costly and much faster.
10. Interoperability: We have already seen AMM projects of other chains launching in Uniswap. Luaswap is a Tomochain Project and Polkastarter is a Polkadot project. There will be a solution that will incorporate and bridge all the major blockchains to provide an integrated AMM solution.
What other changes do you think we will see in crypto exchanges in the coming days. I would love to hear further from you in the comments section.
Note: This post was first published here for Cryptowriter in association with voice.com.
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