FTX’s collapse shocked the crypto world. However, many voices within the industry saw the collapse of the centralized crypto exchange as a new opportunity for DeFi (decentralized finance).
With trust in centralized exchanges vanishing, DeFi protocols would become the go-to platforms for digital asset trading. These platforms are trustless, peer-to-peer, transparent, and overcollateralized. This means that they are potentially more robust than centralized exchanges like FTX.
However, analysts have pointed out that DeFi still has some important limitations. Earlier, JPMorgan issued a report acknowledging that the recent string of crypto bankruptcies came from centralized entities.
Still, Nikolaos Panigirtzoglou, an analyst from the investment bank says that centralized exchanges will likely remain dominant in the foreseeable future.
"We are skeptical of a structural shift away from centralized exchanges (CEX) into decentralized exchanges (DEX)," Panigirtzoglou said.
Most price discovery still occurs on centralized exchanges, and DeFi protocols rely on oracles that obtain price data from them. Moreover, DeFi is still at a greater risk of hacks and exploits. Chainalysis estimates combined losses of…
