Centralized Crypto Exchange Platforms (CEXs)
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The Centralized Crypto Exchange (CEX) platforms facilitate asset liquidity, provide easy access to the crypto market, and ensure a high level of security. These benefits and more became a strong boost for many crypto investors.
For this reason, the number of investors on CEX platforms is growing at an exponential rate. The incredible growth of the CEXs is fueled by how the platforms make crypto easily accessible to users for their transactions.
Centralized Exchange Platform vs Decentralized Exchange Platform
Some investors may prefer Decentralized Exchange (DEX) platforms to Centralized Exchange (CEX) platforms for several reasons, which may include lower fees, greater privacy, and the lack of a central authority (as it operates based on the peer-to-peer network method). DEX is still relatively new in the crypto space, and they have a long way to go to catch up with CEXs. When it comes to handling the processing of huge volumes of trade, Decentralized Exchange (DEX) platforms are still far behind. According to the information provided by The Block, DEXs execute around 8% of the volume of trades handled by CEXs. Apart from that, Centralized Crypto Exchange (CEX) platforms focus on user-friendly products that are tailored toward attracting and retaining users.
Investing in Centralized Platforms
There are different ways of investing on the CEX platforms some of which include HODL (HODL means buying crypto to hold for an opportune time of sale), staking, and many other methods. It is even possible for investors to buy shares from some of these companies on the platform. Every crypto platform typically has its own native tokens that serve as the ecosystem’s economy. Buying the native tokens of these crypto companies is in a way similar to buying the shares of the companies. The indicator of a growing crypto company is the increase in the value of shares and the value of the native token. However, investors should be aware that investing in CEX carries a high risk, but also a high reward (if all goes well for the investor).
Top Centralized Exchange Platforms
Binance
A year after Binance was launched, its users grew to over 13 million. The platform started in 2017 and it came almost five years after Coinbase. Today, Binance is regarded as the world’s largest crypto exchange platform, judging by the volume of trade it processes.
In 2019, Binance created its own stablecoin known as BUSD, moved from the Ethereum blockchain to their own blockchain and launched a Binance platform that complies with the regulations of the United States.
According to the Chief Executive Officer of the Binance network, they generate most of their money from transaction fees, which constitute about 90% of the company’s total income.
Coinbase
Coinbase should have been the first crypto exchange platform because it was created a few years after bitcoin was established. Coinbase started in 2012. And it started to provide a simple solution for making Bitcoin transactions very easy and safe for users. In the past years, coinbase has released so many crypto projects aimed at catering to the specific needs of individuals and business organizations, and this in turn is widening the company’s market and increasing its revenue.
One of the major ways Coinbase generates income is through transaction fees. Reliance on revenue fees alone does not provide enough sustainability because the market makes more money in a bull market than it does in a bear market. The good news is that Coinbase has created a second source of revenue called subscription and services revenue to counteract this dependency on transaction revenue. Custodial fees, interest revenue, and platform subscription services make up this amount.
OKX
OKX is a centralized crypto exchange platform that offers a wide range of crypto services to users. Some of the services they offer include trading bots, copy trading, and various derivatives. It was launched in 2017 and it offers services to customers around the world except to users in the U.S. OKX is attractive to investors because of the low trading fees that it charges.
In early 2022, OKX grow to take up the position of the second largest centralized exchange platform by its volume. However, later on in the year, Coinbase overtook it as the second-largest CEX. So, OKX is now in the third position.
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