Centralized Exchanges Evolve into Universal Exchanges

Centralized crypto exchanges are increasingly incorporating DeFi features into their platforms. Research from Animoca Brands indicates that this shift may lead to the emergence of “universal exchanges” or UEXs.

In a report shared with The Defiant, analysts noted that UEXs could attract a broader audience by offering services beyond trading. These may include access to on-chain tokens and tokenized real-world assets.

The Shift in User Dynamics

While centralized exchanges (CEXs) have driven crypto growth for years, the expansion among crypto-native users is slowing. Analysts highlight that new tools, like the memecoin launchpad Pumpfun and decentralized exchanges (DEXs), are diverting users.

To remain competitive, major exchanges are increasingly integrating wallets, on-chain trading, and DeFi features. Scott Shapiro, head of trading at Coinbase, emphasized the importance of merging DeFi with centralized finance to create a more universal trading experience. He stated that this transformation allows access to new asset classes while maintaining user-friendly interfaces for traders.

Vision for the Future

Animoca’s research indicates that CEXs are beginning to integrate DEX tokens. Platforms such as Binance Alpha and Bitget Onchain enable users to trade tokens that were previously limited to decentralized platforms. Gracy Chen, CEO of Bitget, noted that the next wave of financial products will present a challenge to traditional banks, combining the security of CEXs with the token accessibility of DEXs along with traditional finance’s tokenized stocks and bonds.

Animoca correlates the UEX trend with recent pro-crypto regulations in the U.S., allowing exchanges to put real-world assets on-chain. This facilitates traditional investors exploring crypto without grappling with intricate on-chain processes.

When asked about potential regulatory challenges from integrating DeFi into CeFi, Chen acknowledged existing gray areas regarding products and services. She mentioned that while custodial and non-custodial products are currently separated, hybrid models like UEXs are likely to encourage regulators to refine their frameworks to embrace the benefits of decentralization while ensuring user protection.