Don’t be mean to CEXs — Crypto relies on them

The cryptocurrency market is a zero-sum derivatives market where individuals trade against each other based on differing expectations of the value it represents rather than the actual value itself.Zero-sum nature of the derivatives marketA zero-sum video game is a scenario where any gains made by one individual come at the expenditure of losses for another individual. In derivatives markets, choices and futures are thought about zero-sum because the contracts represent contracts in between 2 parties, and if one trader loses, the wealth is transferred to another trader.Related: Ripple decision could trigger a new bull market– Or more malaiseThe zero-sum nature can develop a speculative and highly competitive environment where traders are focused on short-term gains rather than the underlying value and potential of the cryptocurrencies. As cryptocurrencies gain appeal and worth, there is a propensity for users to gravitate towards centralized exchange (CEX) platforms since of their greater effectiveness, dependability and more easy to use interfaces.Change in market share for top CEXes, March-May 2023. Source: CCDataFurthermore, the reliance on continuous adoption and capital injection can create a cycle where the value of cryptocurrencies is primarily driven by speculative trading and market sentiment rather than underlying technological developments.

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The cryptocurrency market is a zero-sum derivatives market where people trade versus each other based on differing expectations of the value it represents rather than the real value itself.Zero-sum nature of the derivatives marketA zero-sum game is a circumstance where any gains made by one participant come at the expense of losses for another individual. In derivatives markets, futures and options are considered zero-sum because the contracts represent agreements in between 2 parties, and if one trader loses, the wealth is transferred to another trader.Related: Ripple decision could stimulate a brand-new bull market– Or more malaiseThe zero-sum nature can develop a speculative and extremely competitive environment where traders are focused on short-term gains rather than the underlying worth and potential of the cryptocurrencies. As cryptocurrencies gain appeal and value, there is a tendency for users to gravitate towards centralized exchange (CEX) platforms since of their higher effectiveness, reliability and more easy to use interfaces.Change in market share for leading CEXes, March-May 2023.