CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Decentralized Exchanges (DEX) and other DEFI (Decentralized Finance) is going through a tough moment - some of the most high profile projects in the space are undergoing restructurings and pivots and industry incumbents have, for the most part, gone quiet on their DEX plans.
The most high profile news was a divorce between Bitfinex (BFX) and their ERC-20 based DEX Ethfinex. The DEX had split management and resources with BFX. The split sees BFX relinquish ownership in the platform and the exchange will rebrand under the name DeversiFi. Elsewhere, a report was released about decentralized lending platform Compound Finance where a point of failure was identified that, 'would allow funds to be trivially drained' from the platform's smart contracts (the company admits that centralized lending is currently their source of revenue). Additional stories depict other challenges such as EOSfinex barring certain geographical regions and Binance's DEX trading negligible volume.
Crypto Takeaway: We have been of the view that it is too early for decentralized exchanges. Crypto itself is in its infancy and has modest adoption. Moving to decentralized exchanges adds another layer of unfamiliarity in an ecosystem that is already criticized for being difficult to understand. While decentralized exchanges are an interesting thought experiment and could very well be the future of exchange trading, the above examples underscore the thesis that right now they are a step too far.