The crisis and reconstruction of the crypto industry: face the new generation!
You must have experienced pain to experience the joy of life.
Author: John, ChainCatcher
I. Destruction and Circulation
Throughout the ages, “twists and turns” is almost a basic rule for the development of things. Currently, this rule is frequently “revealed” in the 10-year-old “crypto industry.”
In 2022,FTXLightning exploded, causing a series of secondary disasters.
In 2018, Fcoin crashed, and since then, crypto has entered Deep Bear.
In 2014, the Mentougou incident is still unresolved.
On the surface, it's a four-year cycle; in fact, every crisis forces the industry to the next level.
After the Mentougou incident, people began to search for more diversified security solutions, which were born during this periodEthereumThis smart contract public chain, which can be called the world's computer, has further opened up the vision and imagination of crypto enthusiasts; during the deep bear cycle after Fcoin's collapse, a large number of “gold diggers” were filtered out of the market, leaving behind those hard-core talents who are really interested in cryptography for the futureDeFiThe rise of NFTs, and even Web3 has provided the necessary conditions, and this time is no exception.
II. Salvation and Rebirth
Looking back at the FTX explosion timeline, the rescue campaign upgraded from an initial focus on FTX itself to a level of trust in the industry.
After the crisis, investors began a “coin withdrawal campaign.” To give users peace of mind,OKXThe first batch of leading CEXs such as Binance made statements and publicly shared their auditable merkle tree reserve certificates (common asset audit method) to prove whether the fund reserves were sufficient, but the asset composition of each reserve fund was intriguing. According to the knowledge map agreement 0xScope testing the total reserve certification analysis of some exchanges, platform coins account for a relatively high share of their total exchange reserves include HuobiGlobal,Bitfinex、Crypto.comHowever, the altcoin SHIB actually accounts for 20% of the Crypto.com reserve composition.
Overall, among CEXs, the leading platform Binnace has the highest total reserves, but the platform currency BNB and stablecoin BUSD also account for a large share of its asset composition, and the outside world is full of doubts about this. In comparison, the OKX asset structure, which is in the same leading position as Binance, is mainly Bitcoin, Ethereum, and stablecoins, and the ratio is healthier.
On the issue of FTX triggering an industry crisis this time around, compared to “social cow” Binance and “influencer” Huobi, OKX, which has always kept a low profile, has received a lot of praise. Many practitioners said, “In our crypto industry, wealth and myths are all over the place. Living for a long time is king. I hope OKX will continue to keep a low profile and move forward steadily.”
Currently, CEXs such as OKX, Kraken, Bitmex, Binance, and Gate.io have all begun to support user asset inspection functions, and users' trust in CEX is being rebuilt.
Take the low-key OKX as an example. The platform announced the official launch of the Proof of Reserve (POR) on Wednesday. All users can independently check OKX's on-chain wallet address assets and total user assets within the Merkle Tree (Merkle Tree) on the official website page to verify their asset reserves. Furthermore, according to a tweet from its CMO Haider, OKX will also launch a higher-level verification method for institutional users in the future, and promote institutional users who are willing and able to independently manage wallets to use wallet mechanisms such as threshold signatures, to truly hand over asset control to users and achieve the greatest degree of separation of asset control rights.
Currently, no CEX has actually done the separation of asset control. If realized, it will be a landmark “leap forward” for the entire crypto industry.
OKX also seems to be well aware of this. “Our background is a technology company, and the team is driven by the native spirit of Bitcoin. CEX is actually the most mature application scenario in the crypto network. Its essence is to help buyers and sellers match orders, provide reliable and secure technology and services, and provide people with an entrance to the Web3 world at the right time, nothing else. There are so many temptations in the industry, it's important to stay “mindful.” Jack, the product manager, told Chain Catcher that OKX's next priority will be to maximize the transparency of industry funding, rebuild industry confidence, and accompany users into a new cycle.
From an objective point of view, as the industry's most mature application at present, it may also be a key entry point for people to enter the Web3 world in the future. After all, compared to the centuries-old history of traditional finance, the innovation and practice of cryptographic technology at the financial level is only in its 10th year. It is already extremely useful, and there is room for trust.
Currently, in addition to rebuilding user trust by improving financial transparency, leading CEXs such as OKX and Binance have also launched a number of industry recovery plans. Binance is launching a recovery fund, and OKX is more targeted. It mainly cooperates with OKC to independently develop the public chain OKC to launch an ecological support program of 100 million US dollars to focus on supporting the Solona public chain, which is greatly affected by the FTX explosion, to support the smooth migration of these high-quality project players, and at the same time provide ecological, technical, and liquidity assistance to eligible project parties. According to a CEX practitioner, in the future, these leading CEXs may have more plans to restore confidence in the industry.
Of course, FTX still continues to have aftershocks. Many closely related investment institutions, projects, public chains, and even business partners are still involved, but there is no need to worry too much. The survival of the fittest market rules are directly helping crypto users filter out risks, and at the same time screen out “players” with strong resilience to risks.
3. Behind the crisis of trust should be collective reflection and progress
Actually, since FTX exploded, there has been more credible public opinion about DEX in the industry, but is that really the case? The answer is unknown, but it is clear that CEX and DEX are not dualistic and antagonistic; on the contrary, they are harmonized and different, and each has its own strengths, and this also seems to be the starting point for God V to provide a reference solution for CEX trust construction.
Whether it's the collapse of FTX or all the previous ones, aren't we denying anyone that these problems have occurred? Who do you support? Instead, investors and practitioners can more clearly understand the nature of CEX and its value, and not be fooled by the wealth effect. Basically, behind the CEX crisis is an industry crisis. What is behind the industry crisis? This is an issue worth discussing and reflecting on collectively. It is also a prerequisite for the crypto market and Web3 industry to become “new.”
To quote a veteran practitioner, our industry looks at finance from a distance, law from a close perspective, and conscience.
