Users continue to seek to divert funds away from centralized exchanges, paving the way for blockchain-based alternatives to thrive.
With FTX, cryptocurrency had its Lehman moment — or, perhaps, another Lehman moment. The macroeconomic downturn did not spare crypto, and as November approached, no one expected the collapse of a billion-dollar empire.
A bank run was unavoidable as the rumors of bankruptcy spread. Sam “SBF” Bankman-Fried, the once-effective altruist now imprisoned, maintained that his assets were “fine.” They were, of course, not. Most major crypto organizations, from Genesis to Gemini, have been affected by the contagion effect in the aftermath.
The hammer of macroeconomic stress in an atmosphere of centralization has repeatedly shattered the feeble layer of stability. It is possible to argue that centralized systems grow quickly for the same reason: they prioritize efficiency over stress tolerance. While traditional finance takes decades to realize economic cycles, the fast-paced nature of Web3 has helped us appreciate — or rather, scorn — the risks posed by centralized exchanges.
They pose a simple but far-reaching problem: they lull skeptical and intelligent investors into a false sense of security. As long as we’re in a “bull” market, whether natural or manipulated, there will be far fewer reports about failing balance sheets and shady backgrounds. The disadvantage of complacency arises precisely when this is not the case.