Centralized exchanges have been the dominant force on the cryptocurrency landscape for over a decade, acting as the primary method of transferring value between blockchains and serving as a gateway into crypto for the masses. They have been instrumental in the early development of the nascent crypto sector, with many reaping substantial profits. Binance’s revenue, for example, hit $12 billion in 2022, a ten-fold increase in just two years.
However, the success of centralized exchanges has come at a cost. Not only has their dominance placed an unnecessary financial burden on users, but I would argue that the custodial nature of CEXs has hindered the development of the Web3 ecosystem. The growth of DeFi has happened in spite of the CEXs’ stranglehold, with users relying on non-custodial wallets to access even the most basic of DeFi products.
