The main reason why places like Coinbase and Binance did well is because post-Mt.Gox it brought much needed legitimacy in the fiat-crypto exchanges that helped to stabilize the industry's on-ramps - which they were definitely successful in doing. Over time, however:
- Fees became very high, for what you're getting.
- They use a convoluted system for staking that typically ignores the way rewards/governance works on individual projects, often pocketing a huge part of the difference.
- The centralized status makes them easy targets for governments to attack. The banning of crypto accounts in Hawaii (leading to CB and BNB pulling out), banning of staking rewards in California are good examples.
- They claim to have made "significant progress" on the regulatory/political sides of things but all of the legislation that passed is skewed towards benefitting orgs exactly like them, rather than small Web3 projects or individual wallet holders.
- Outside of the Web3 bubble, what the general public actually sees from exchanges are lobbyists trying defend the actions of FTX and $TRUMP-esque rug pulls and other pump-and-dumps, of which @base is a part of because it treats its customers as extraction targets rather than partners to work with.
- What they're actually trying to do with @base and Farcaster is to "making banking social", in order to justify their high fees instead of working on their fundamentals, which most people are not in the mood for right now, given that we're heading into a recession.
This is where competition comes into play - in the last few years there have been dozens - if not hundreds - of smaller fiat-to-crypto exchanges services that you can integrate directly into wallets and platforms which work just as well for much cheaper. You can buy crypto directly from @TempleWallet using Google/Apple Pay or convert it right from @objktcom if you really need to get that NFT on impulse. Metamask has similar access to 3rd party features that does similar conversions for you.
CB and BNB may have served an important purpose at one point in time, but in a new industry that's evolving quickly every day, they might not have what it takes to make it to the next cycle.
When I think of exchanges, I tend to think of those currency conversions you see at airports where you need to convert your dollars to other types of cash that you happen to need. Sure, it needs some money backing it, but it was never meant to be a bank where you would store all of your money in one place at a time. In-app exchanges are closer to what these things were meant to be and I think that in the long run, that is what will end up surviving in the end.
We might be seeing the end of the idea of the "crypto bank" - where you give some entity money to manage your coins for you. What's the point? That's what cash is for. If you're interested in crypto coins, just buy and hold it yourself. Exchanges are there for conversions, not for Storing-Your-Value. (A piece of propaganda that was invented in the last few years.) Not your wallet, not your coins, as they (used to) say.
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