According to a recent report by blockchain analytics firm Nansen, smaller crypto exchanges have gained momentum in the wake of the collapse of the more dominant FTX exchange. The report found that the landscape for centralized exchanges (CEXs) has changed following the FTX collapse, with most exchanges experiencing a decrease in trading volumes as traders became more cautious. However, smaller exchanges such as Kraken, Bybit, and Bitget have seen increased trading volumes, while decentralized exchanges (DEXs) have remained relatively stable.
Increased Trading Volumes for Smaller Exchanges
The Nansen report found that UAE-based exchange Bybit and US-based exchange Kraken have seen an increase in their average monthly trading volumes from the six months prior to the FTX collapse to the six months after the collapse. Bybit and Kraken saw an increase of 7.65% and 14.35%, respectively. Meanwhile, Bitget, a popular exchange among Chinese and South Korean crypto traders, experienced a fall in volume of only 7.29% over the same period.
These smaller exchanges’ strong performance is notable considering that Binance remains the world’s largest exchange by volume, despite a decline in market share following the latest regulatory crackdown.
DEXs Remain Stable
While most CEXs saw a decrease in trading volumes after the FTX bankruptcy, the Nansen report found that DEXs have remained relatively stable. The report suggests that this trend may be attributed to lesser trust in centralized exchanges following FTX’s collapse and further regulatory uncertainty.
Renewed Focus on Transparency
The collapse of FTX has also resulted in a renewed focus on transparency in the crypto industry. Many major exchanges have published so-called proof-of-reserve statements. While the Nansen report notes that these statements do not guarantee an exchange’s solvency, they should still be considered a new minimum standard that can be expected from crypto exchanges.
Overall, the Nansen report suggests that smaller crypto exchanges are gaining momentum in the wake of the FTX collapse. While larger exchanges such as Binance remain dominant, the report highlights the potential for smaller exchanges to compete in an industry that has become more cautious and focused on transparency. The stability of DEXs also suggests that decentralization may become increasingly popular among traders who are wary of centralized exchanges.