The Beginning of the Shift to DEX
The last few weeks have been a wild ride in cryptoland with Bitcoin leading the charge and a number of altcoins joining in. Ex-US Treasury secretary, Lawrence Summers, has even been quoted as saying that Bitcoin was “here to stay”.
No surprise that regulators around the world have been paying even more attention to the token economy. In fact ever since the ICO bubble in 2017, regulators have been stepping up scrutiny on this fast-evolving space.
The SEC lawsuit against Ripple, what was once the third largest cryptocurrency by market capitalization, can be seen in light of the tightening regulatory landscape. As with the UK Financial Conduct Authority’s move to ban the sale of cryptocurrency derivatives to retail investors a couple of months back.
The US Treasury Department wing, FinCEN (Financial Crimes Enforcement Network) has also recently announced that new impending regulations would require US citizens to report crypto assets in excess of USD 10,000 on virtual asset service providers.
The announcement sparked off reverberations as far flung as Southeast Asia where Singapore and Malaysia financial regulatory bodies further enhanced their regulatory framework for virtual assets.
Institutional Interest Continues
Amidst the doom and gloom of regulatory news, the number of Bitcoin whales continues to increase. According to blockchain data provider Glassnode, the number of Bitcoin whales is at an all-time high, having reached 2,425.
This suggests that big spenders are projecting confidence in the value of BTC, future or otherwise. Over the past year, the number of institutional investors such as billionaire hedge fund manager Paul Tudor Jones, investment firm Grayscale and tech giant MicroStrategy, who possess BTC holdings in the hundreds of millions to even billions, have helped to increase demand for the coin.
On the heels of San Francisco-based Anchorage attaining conditional approval from the U.S. Office of the Comptroller of the Currency (OCC), banking powerhouse Goldman Sachs issued an RFI (request for information) to explore digital asset custody, mirroring a move from JP Morgan who issued an RFI on crypto custody in October 2020.
DEX Volumes Keep Reaching Record Highs
With the tightening regulatory landscape, centralized cryptocurrency service providers are seeing increased measures imposed on them. For some crypto exchanges, this has resulted in delistings of popular cryptocurrencies such as XRP, XMR, ZEC and DASH recently.
Meanwhile, together with the soaring interest from institutional investors, the popularity of DEXs (decentralized exchanges) has continued and this month’s (Jan 2021) DEX volumes are already set to break September 2020’s record highs. Data compiled by The Block indicates that current DEX volumes (with another 11 days before month end) are already over USD 26.01 billion, surpassing DEX volumes back in September 2020 which reached USD 26.6 billion.
DeFi Trend Sees More Tokens Getting Wrapped
Crypto projects have not been impervious to this industry trend. Smart advertising token SaTT, for instance, has listed on both Uniswap, the world’s largest decentralized exchange and Binance DEX.
“To facilitate the interest in DEX trading, with interoperability being a vital consideration, we have specially re-formatted our SATT token into wrapped versions,” says SaTT CEO Gauthier Bros. “The WSATT and BSATT were specially developed for trading on Uniswap and Binance DEX”.
The original SATT smart advertising token is currently optimized for speedy platform transactions on the SaTT advertising marketplace. The WSATT lowers gas fees for transactions on Uniswap, amongst other utilities, while the BSATT BEP8 token is optimized for use on the Binance Chain with cheap issuance fees.
Will there be more tokens getting wrapped as the interest in DeFi continues?
“Certainly, we are just at the beginning of a shift to decentralized finance and DEX’s,” says Bros. “As a matter of fact, we have been developing 3Xchange, our own decentralized exchange, which is a Uniswap-type liquidity pool system.”
With DEX’s offering cheaper transaction fees, privacy and lower counterparty risks, it might be a matter of time before the shift to DEX from CEX happens. In the meantime, WBTC (wrapped BTC) and wETH (wrapped Ether) can expect to be joined by more wrapped digital assets getting on board the DeFi revolution.