After cryptoassets themselves, exchanges are arguably a very powerful a part of the crypto ecosystem. With out exchanges, people would have fewer means for purchasing and promoting crypto, which in flip wouldn’t profit from the spectacular value rises which have pushed a lot funding into the house in 2020.
However whereas 2020 has been a fairly good yr for exchanges, what can we anticipate from them in 2021? In response to varied buying and selling platforms talking with Cryptonews.com, we’re more likely to see quite a lot of vital traits emerge subsequent yr, as exchanges adapt to the altering construction of the crypto business.
These embrace an enlargement of DeFi (decentralized finance) companies and token listenings, a renewed concentrate on decentralized exchanges (DEXs), and in addition a revamping of consumer expertise, notably within the wake of PayPal’s transfer into crypto. There will even be a basic enlargement of buying and selling options, together with partnerships with retailers and a push for brand spanking new licenses.
2020: What was anticipated, and what occurred?
Again in 2019, business gamers said that exchanges would largely concentrate on three foremost areas: decentralized exchanges, diversification, and enhancing safety.
Historic month-to-month high tier vs decrease tier quantity
DEXes did improve in quantity over the course of 2020, however for probably the most half it wasn’t the key centralized exchanges that launched them, however somewhat unbiased gamers seeking to carve out niches for themselves (e.g. Gnosis). Nevertheless, we did see Bitfinex launching its EOSfinex, a non-custodial alternate on the EOS mainnet.
Exchanges definitely diversified in 2020. Binance launched a brand new staking platform, a wide range of futures and choices buying and selling companies, and its personal Binance Card. Likewise, Coinbase launched its personal Visa card in the US, whereas additionally rolling out its Coinbase Custody service internationally and increasing its staking companies.
As for safety, many main exchanges did introduce new measures and techniques, however hacks remained pretty frequent (e.g. KuCoin).
Month-to-month spot vs derivatives quantity
2021: Exchanges focusing extra on DeFi
We spoke to executives with three exchanges for this text, and all three talked about DeFi when requested which areas can be notably vital for exchanges in 2021.
“Our personal shoppers have proven elevated curiosity in DeFi tokens, so we listed all kinds of them on our platform. Simply at the start of November we have now added 12 new ones, out there for each buying and selling and staking functions. And we plan to combine with the DeFi subject even stronger sooner or later,” mentioned Konstantin Anissimov, the Government Director at CEX.IO.
Binance CEO Changpeng Zhao attracts an analogous image, regardless of admitting that he prefers to not speculate an excessive amount of about what new services or products Binance can be launching over the subsequent 12 months.
“That mentioned, I feel the DeFi improvements we’ve seen this yr round liquidity swimming pools and [automated market makers], particularly for stablecoin buying and selling are very fascinating. I imagine these are right here to remain,” he informed Cryptonews.com.
Zhao added that Binance has already launched many DeFi-oriented merchandise, reminiscent of liquidity swimming pools and financial savings (curiosity/yield producing merchandise).
“We additionally created the Binance Innovation Zone particularly for itemizing newer cash, offering liquidity for DeFi tokens whereas defending much less skilled merchants from the dangers in buying and selling them,” he added.
The regular evolution of DeFi merchandise is one thing that OKEx CEO Jay Hao signifies can be a precedence for this alternate additionally.
“I feel that DeFi-style incentives have turn out to be more and more vital for exchanges to supply, and we’ll evolve and enhance the staking initiatives that we have now on OKEx, so this additionally consists of OKEx Jumpstart Mining which permits OKB holders to achieve early entry to up-and-coming new initiatives and earn staking rewards,” he mentioned.
And with the full worth locked into the DeFi sector hovering above USD 14bn, it’s a secure guess that increasing DeFi companies can be vital for just about each main alternate subsequent yr.
Extra diversification, licenses, decentralized exchanges
Very similar to specialists urged final yr, the individuals we’ve spoken to this time round point out that exchanges will once more concentrate on diversification, providing as many various merchandise as potential in an effort to present a extra full ecosystem of companies.
“In 2021, we’ll proceed to work on enhancing and growing OKExChain to host an ecosystem of decentralized apps with a foremost concentrate on buying and selling,” mentioned Jay Hao, including that one other precedence for OKEx can be increasing the partnership community and retailers who settle for its OKB coin.
Konstantin Anissimov famous that CEX will even be diversifying in a wide range of areas subsequent yr.
“I can’t disclose full info for now, however what I can say is that our new companies will meet the wishes and desires of all kinds of shoppers – from people to large-scale institutionals,” he mentioned.
Because the above quote suggests, this ‘diversification’ is one other means of claiming that exchanges will adapt to the altering wants of customers and companies inside the cryptoasset ecosystem, whereas additionally introducing new options or companies which may entice extra institutional buyers into the house.
A method of engaging extra funding is to launch in new markets, and CEX can be pursuing such a technique in 2021 by trying to achieve certification in as many areas as potential.
“We plan on changing into one of many only a few cryptocurrency exchanges with respected and well-regulated standing throughout the entire of the US, the UK and Singapore,” mentioned Anissimov.
One particular space that can obtain ongoing consideration in 2021 can be decentralized or non-custodial exchanges, though as with final yr, this can contain alternate upgrading and enhancing their non-custodial choices, somewhat than launching utterly new ones.
“We will even develop OKEx Earn to accommodate extra of the tokens that our customers want to see and can proceed to strengthen OKEx DEX, as we see a really robust future for decentralized finance and have already contributed to its progress,” mentioned Jay Hao.
Consumer expertise
With PayPal producing headlines in October by launching its personal crypto service, the likelihood arises of exchanges transferring in an analogous route in 2021 and providing its personal fee companies. Nevertheless, the exchanges we’ve spoken to don’t actually view PayPal as a rival, even when some want to get extra concerned in funds.
“Development in funds was one of the apparent use instances we hoped to see extra of in 2020, however hasn’t taken off as strongly anticipated … A greater technique could also be to latch onto present fiat fee rails in order that they’ll co-exist. Binance Card is one step in that route,” mentioned Changpeng Zhao.
No matter whether or not PayPal will turn out to be a direct rival to crypto-exchanges, exchanges will look to refine their consumer expertise (UX) in 2021.
“Sure, we intend to enhance the consumer expertise, each for cell customers and for the net ones. We plan to make a handy cell interface comparable in simplicity and comfort to fashionable on-line banks, the place you’ll be able to simply retailer, alternate, obtain, ship, stake cryptocurrency,” mentioned Konstantin Anissimov.
OKEx’s Jay Hao additionally affirmed that the alternate is working to constantly enhance consumer expertise, as does Binance’s CEO.
“For instance, we not too long ago launched a Lite model of the Binance app which streamlines the interface for a less complicated buying and selling expertise and extra a newbie pleasant means to purchase crypto with fiat,” Zhao mentioned.
Taken as a complete, 2021 will see exchanges more and more adapt to the cryptocurrency ecosystem’s evolution. It will imply extra DeFi merchandise, new buying and selling options, and extra of the UX and licensing that can herald rising funding.
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Study extra:
Crypto in 2021: Bitcoin To Ride The Same Wave Of Macroeconomic Problems
Crypto Adoption in 2021: Bitcoin Rules, Ethereum Grows & Faces Rivals
Crypto Regulation in 2021: The Piecemeal Approach & New Winds
Crypto in 2021: Institutions Prefer Bitcoin, Retail Open to Altcoins
Crypto Tech In 2021: Focus on Scalability, Privacy and Usability
Crypto Security in 2021: More Threats Against DeFi and Individual Users
