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DeFi Platforms witnessed Spike in Trading Volumes after the FTX collapse!

DeFi Platforms witnessed Spike in Trading Volumes after the FTX collapse!

Crypto crashes and various crypto exchanges making the headlines in 2022 for either filing for bankruptcy or halting withdrawal services. The very recent incident has been the FTX collapse. However, the repeated incident of FTX and Voyager has also set the market sentiment for what the crypto space is more likely to curve towards.

The FTX collapse has raised a lot of questions from investors regarding unregulated exchanges. Investors are now questioning the safety of one’s funds on one of these centralized exchanges and have also voiced grave concerns about the centralized decision-making which does not really have any checks in place. This has pushed investors to move their funds and crypto into DeFi platforms. Furthermore, there has been a couple of recent reports suggesting that looking at the downfall of numerous crypto exchanges that have taken place over the last decade has permanently taken 1.2 million Bitcoin, which comes to almost 6% of all Bitcoin available in the 21 million, out of circulation. BTC price is currently running with a value of $16,200.25 as of 12:44 pm, November 28, 2022.

Read more: Crypto Crash Recap 

Moreover, the disclosure of certain malpractices by the FTX exchange has also resulted in causing panic among investors. The exchange outflows have seen historic highs of close to 106,000 BTC per month in the wake of the FTX fiasco, according to Cointelegraph reports. The whole fiasco has churned out an extensive loss of trust in centralized exchanges, also referred to as CEXs, and has pushed investors toward self-custody and decentralized finance (DeFi) platforms.

The change in market behavior at large has seen many crypto users to have pulled their money from crypto exchanges. In doing so, the users have turned to noncustodial options to trade their funds in. According to data, one of the largest decentralized exchanges, Uniswap, has seen a significant spike in trading volume on November 11, 2022;  the day when FTX filed for bankruptcy.

In the last week, Uniswap has registered over a billion dollars in 24-hour trading volume; which is considerably higher than many centralized exchanges in the same time frame. All these activities have started to pile up since the FTX incident’s reasons were disclosed. The DeFi chief of staff at Polygon, Aishwary Gupta commented that the loss of centralized entities such as FTX has certainly reminded users about the significance of DeFi. He also commented, “DeFi-centric platforms simply cannot fall victim to shady business practices because ‘code is law’ for them. Clearly, users realize it as well. In the wake of the FTX implosion, Uniswap flipped Coinbase to become the second-largest platform for trading Ethereum after Binance. As decentralized platforms are run by auditable and transparent smart contracts instead of people, there is simply no way for corruption or mismanagement to enter the equation.

Bernd Stöckl, chief product officer and co-founder of Palmswap has commented that DeFi has certainly seen a rise in its usage and it will surely rise thanks to the FTX downfall. He also said, “It is said that Crypto.com, Gate.io, Gemini, and some other centralized exchanges are in hot waters. With so many CEXs falling, trust in custodial wallets is very low and the advantages of DeFi will surely be adopted by more users.

With the rise in DeFi platforms being used by investors, the main focus now comes in strengthening the DeFi workings for better execution of the trades taking place. Darren Mayberry, ecosystem head at decentralized operating protocol dappOS, has commented that noncustodial services should be the way forward for investors. He also said, “Accountability and audits should be standard procedures for all investors, due diligence is a natural part of business, as is fact-checking and investigation. As for non-custodial wallets — they are the most reliable form of storage that transfers liability solely onto their owner and thus negates the possibility of counterparty risks.

Source: Cointelegraph

Read more: Uniswap Price Prediction

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