Written by: BUBBLE
Centralized exchanges are undergoing a collective directional adjustment. From Coinbase’s nearly $2.9 billion acquisition of the derivatives trading platform Deribit, to the collaboration with Shopify to promote the adoption of USDC among physical merchants. Then there’s Binance launching the Alpha program to reshape the primary market pricing mechanism. Next, Kraken acquired NinjaTrader to expand into the options market and partnered with Backed to develop a “U.S. stock” business. Meanwhile, Bybit has also opened trading for gold, stocks, forex, and even crude oil indices on its main platform.
Leading trading platforms are actively expanding their own revenue streams, trying to achieve multi-dimensional business “blood replenishment” from off-chain to on-chain, from retail investors to institutions, and from mainstream coins to altcoins. At the same time, these platforms have also extended their tentacles to the on-chain ecosystem, taking Coinbase as an example, its main site has integrated DEX routing on the Base chain, intending to break through the liquidity barriers between CeFi and DeFi, and regain the share of transactions that have been sucked up by on-chain protocols such as Hyperliquid.
However, behind these actions is the continued pressure on the actual revenue capacity of trading platforms, and crypto trading platforms are facing unprecedented development bottlenecks. According to Coinbase’s latest financial report, its transaction fee income has halved from $4.7 billion in 2024 to $1.3 billion in Q1 2025, down 19% from the previous quarter. Among them, the share of BTC and ETH trading volume has decreased from 55% in 2023 to 36%, and the revenue structure is increasingly reliant on the more volatile altcoin sector. However, operating costs have not come down, reaching $1.3 billion in the first quarter of 2025 alone, almost in line with revenue. Binance is also facing the challenge of declining transaction fees, with its year-to-date average transaction fee revenue hitting a three-year low, according to the TokenInsight report, although it still leads in market share.
Binance’s trading volume has remained sluggish for most of the past year, source: coingecko
Transaction fee space is being compressed, on-chain liquidity is continuously being diverted, and traditional brokerages are reshaping their compliance to enter the market. These intertwined forces are compelling CEX to transform into “on-chain platforms.” Well-known KOL ASH analyzed on X that as more DEXs improve their trading mechanisms, products are emerging that can provide user experiences almost comparable to CEXs, but with a more transparent trading process. CEXs have finally begun to notice this and are shifting their strategic focus to permissionless models, with several CEXs starting the battle for the “on-chain CEX” market.
The main focus on infrastructure development of OKX
In the OKX annual letter dated December 30, 2024, OKX founder Star Xu expressed his strong belief that “true decentralization will lead to the mass adoption of Web3” and is committed to building a bridge connecting traditional finance with decentralized finance.
This statement is not unfounded; OKX is currently one of the earliest and most systematically structured centralized trading platforms for on-chain infrastructure, aside from Binance. It does not release a wallet or feature sporadically, but rather constructs a full-stack Web3 operating system that can replace centralized scenarios, forming a closed loop with CEX user assets.
OKX has been continuously advancing the strategic construction of its on-chain infrastructure over the past two years, attempting to transform from a centralized trading platform into a core participant of the Web3 operating system. One of the focuses of its construction is OKX Wallet (a non-custodial wallet that supports over 70 public chains), which integrates functions such as Swap, NFT, DApp browser, inscription tools, cross-chain bridges, and yield vaults in the Web3 sector.
The OKX Wallet is not a single product, but rather the core hub of the OKX Web3 strategy. It not only connects users with on-chain assets but also opens up a channel between centralized accounts and on-chain identities. Due to its comprehensive components, many newcomers who entered the cryptocurrency space around 2023 first encountered on-chain usage through the OKX Wallet.
On the other hand, OKX has also been continuously investing in the underlying network and developer ecosystem. It launched OKExChain (later renamed OKTC), an EVM-compatible L1 public chain, as early as 2020, but this chain has not received strong market support. However, to complement the construction of the chain, OKX simultaneously launched basic components such as a block explorer, developer portal, contract deployment tools, and faucet services, encouraging developers to build DeFi, GameFi, and NFT applications within its ecosystem.
In addition to continuously hosting hackathons and launching an ecological support fund, OKX is forming a complete closed-loop on-chain ecosystem. Although OKX has never publicly disclosed the total investment amount, based on the scale of its wallet, chain, bridge, tools, and incentive system construction, the market generally estimates that its investment in on-chain infrastructure has exceeded 100 million USD.
Binance Alpha, the monetization of reputation and liquidity
In 2024, the crypto market ushered in a bull market boom under the dual stimuli of the approval of Bitcoin spot ETFs and the meme frenzy. Although liquidity has significantly rebounded on the surface, hidden behind the prosperity is the gradual failure of the pricing mechanism between the primary and secondary markets. Project valuations are continually inflated during the VC stage, the token issuance cycle is repeatedly extended, and the participation threshold for ordinary users continues to rise. When the tokens finally go live on trading platforms, they often serve merely as an exit for project teams and early investors to cash out, leaving retail investors with price collapses and high-level buy-ins after the “opening is the peak.”
In such a market environment, Binance launched Binance Alpha on December 17, 2024. This originally experimental feature, which was used in the Binance Web3 wallet to explore high-quality early-stage projects, quickly evolved into a key tool for Binance to reshape the on-chain primary market pricing mechanism.
Binance co-founder He Yi publicly acknowledged the structural issue of “peak at launch” for new coin listings during a Twitter Space responding to community controversies, admitting that the traditional coin listing mechanisms have become difficult to sustain under the current trading volume and regulatory framework. In the past, Binance attempted to correct the pricing imbalance of new coins after their launch through methods like voting for listings and Dutch auctions, but the results have always been unsatisfactory.
The launch of Binance Alpha has, to some extent, become a strategic alternative to the original token listing system within a controllable range. Since its launch, Alpha has introduced over 190 projects from various chain ecosystems including BNB Chain, Solana, Base, Sonic, and Sui, gradually forming an on-chain early project discovery and warming-up platform led by Binance, providing an experimental pathway for trading platforms to regain primary pricing power.
After the launch of the Alpha Points mechanism, it has become a paradise for retail investors to “farm rewards.” Not only players within the field but even those from a wider Web2 community have participated, motivated by the attractive returns that have led many to involve their entire families, companies, and even villages.
Although the competition has become increasingly fierce, there have been instances of tokens like ZKJ plummeting after their alpha launch, raising concerns about their “compliance.” The community has mixed opinions on this; the well-known KOL thecryptoskanda highly praises Alpha, believing that Binance Alpha is the second greatest innovative activity by Binance after Binance IEO. He analyzes its role in the ecosystem, stating that “the historical mission of Binance Alpha is to dismantle the first pricing power of North American VCs like A16Z and Paradigm, who can raise funds from tradfi almost at no cost, and reclaim the Binance system. It also aims to eliminate the shanzhai token listing market of other trading platforms to prevent the emergence of similar situations as Grass that could lead to a loss of popularity on platforms like Bybit, while turning all the capital of various chains into Binance’s capital through BSC. Alpha has successfully accomplished these three goals.”
Coinbase connects to DEX, and the large holders within are providing feedback to Base.
Following in the footsteps of Binance and OKX, Coinbase has also begun its own integration of on-chain ecosystems. Their initial strategy is to connect DEX trading and verified liquidity pools. At the recently held 2025 Cryptocurrency Summit, Coinbase’s Vice President of Product Management Max Branzburg announced that they will integrate DEX on the Base chain into the main Coinbase application, and future applications will embed DEX trading.
Trade any on-chain tokens through Base’s native routing, packaged as a KYC-verified fund pool, allowing institutions to participate as well. Coinbase now has over 100 million registered users, with 8 million active trading users monthly. According to Coinbase’s investor report, the value of customer assets on its platform is 328 billion dollars.
Retail trading accounts for only about 18% of Coinbase’s transactions. Starting from 2024, the trading volume of institutional clients on Coinbase has been steadily increasing (with Q1 2024 trading volume reaching $256 billion, accounting for 82.05% of total trading volume). As Coinbase integrates DEX on Base, the breadth of DeFi combined with the compliance standards of TradFi should bring significant liquidity to the thousands of tokens on the Base chain. More importantly, many products within the Base ecosystem will have the potential for compliance pathways with the real world through Coinbase.
The largest native DEX on Base, Aerodrome, has also become a hot topic of discussion in recent days. As one of the first trading routers embedded in the main Coinbase site, it has risen by 80% in the past week, with a market capitalization increase of nearly 400 million dollars.
The community’s attitude towards this is divided into two parts. The well-known KOL thecryptoskanda is not optimistic about Coinbase’s strategy. When discussing Binance Alpha, he believes that Coinbase is merely imitating Binance Alpha, and that opening the app to buy assets on the Base chain is just scratching the surface. However, KOL deconstructor 0xBeyondLee believes that this is not the same concept as Binance Alpha, stating “Alpha has an entry mechanism; not every coin can be listed. Coinbase’s rhetoric suggests that all Base assets can appear. It’s as absurd as being able to trade the equity of the fruit stand downstairs directly on Tonghuashun. In terms of liquidity and attention, the gains for the Base chain are unprecedented.”
Coinbase’s offensive on on-chain liquidity doesn’t stop there. Well-known KOL TheSmartApe “the_smart_ape” stated on social media that due to Coinbase’s actions, he will start selling the $Hype he has held since TGE. He further explained that Hyperliquid currently has about 10,000 to 20,000 active users daily, with a total user count of approximately 600,000. Among them, 20,000 to 30,000 core users contribute nearly $1 billion in revenue, a significant portion of which comes from the United States.
But most American traders use Hyperliquid because they have no better options. They are excluded from Binance and other major CEXs, unable to trade perpetual contracts. However, when both Coinbase and Robinhood announced that they would launch perpetual futures products in the US, it would be a huge blow to Hyperliquid, as a significant portion of its core users might turn to Coinbase or Robinhood. Coinbase, which offers a safer and more convenient access method without self-custody, no complicated DeFi UX, and is fully supported by regulatory agencies such as the US Securities and Exchange Commission (SEC), can attract most traders, who do not care about decentralization as long as it is safe and easy to use.
Byreal, Bybit’s on-chain doppelganger
Bybit’s actions in the on-chain war are more “restrained” compared to Binance and OKX, avoiding chain creation and not building its own Rollup. It focuses on lightweight advancements in three areas: “user entry,” “on-chain trading,” and “fair issuance.”
Firstly, Bybit has been promoting the independence of the Web3 brand since 2023, launching the Bybit Web3 wallet to introduce users to core on-chain functionalities (Swap, NFT, inscriptions, GameFi). The wallet integrates capabilities such as a DApp browser, airdrop event pages, and cross-chain aggregation trading, while supporting both EVM chains and Solana, aiming to become a lightweight bridge for CeFi users to transition to the on-chain world. However, with the intensifying competition in the wallet market, the project has not generated much excitement.
Bybit has turned its attention to on-chain trading and issuance platforms, launching Byreal, which is deployed on Solana. The core design philosophy of Byreal is to replicate the “matching experience” of centralized trading platforms, achieving low-slippage trading through a hybrid model of RFQ (Request for Quote) + CLMM (Concentrated Liquidity Market Making), and embedding mechanisms such as Fair Issuance (Reset Launch) and Revenue Vault (Revive Vault). It is said that the testnet will be launched on June 30th, and the mainnet will be released in the third quarter of 2025.
Bybit has also launched the Mega Drop on its main site, which has now gone through 4 phases. It uses a model where users automatically receive airdropped tokens for staking projects. The current estimated yield is about $50 per phase for staking $5,000, but this varies depending on the quality of the project.
Overall, Bybit’s strategy in the on-chain war is to “build a bridge connecting CeFi users with DeFi scenarios by leveraging existing public chain infrastructure at a lower development cost,” and to expand its on-chain discovery and issuance capabilities through components like Byreal.
The wave of decentralized derivatives ignited by Hyperliquid has actually evolved from a breakthrough in technical paradigms to a reshaping of the competitive landscape among trading platforms. The boundaries between CEX and DEX are being broken; centralized platforms are actively “going on-chain,” while on-chain protocols continuously simulate centralized matching experiences. From Binance Alpha’s reclaiming of primary pricing power, to OKX building a Web3 full-stack infrastructure, to Coinbase leveraging compliance to reach the Base ecosystem, and even Bybit establishing its own on-chain dual identity through Byreal, this “on-chain war” is far more than a technological competition; it is also a struggle for user sovereignty and liquidity dominance.
Ultimately, who can occupy the high ground of future on-chain finance depends not only on performance, experience, and model innovation, but also on who can build the strongest capital flow network and the deepest user trust channels. We may be standing at the critical point of the deep integration of CeFi and DeFi, and the winner of the next cycle may not necessarily be the most “decentralized” one, but rather the one that understands on-chain users the best.
Hype! Hype! Hype!
In April 2020, dYdX launched the decentralized perpetual contract trading pair BTC-USDC for the first time, marking the beginning of the derivatives journey for decentralized trading platforms. After 5 years of market development, the emergence of Hyperliquid has unlocked the potential of this field. To date, Hyperliquid has accumulated over $30 trillion in trading volume, with the average daily trading volume nearing $7 billion.
With the breakout of Hyperliquid, decentralized trading platforms have become a force that centralized trading platforms can no longer ignore, while the growth of trading players is gradually stagnating, compounded by the diversion caused by decentralized trading platforms led by Hyperliquid. This has prompted centralized trading platforms to urgently seek the next “growth anchor point”. Apart from expanding stablecoins or payment-related “open source” strategies, the foremost strategy is to reclaim the “throttling” of contract players flowing into the chain. From Binance to Coinbase, major centralized trading platforms are beginning to integrate their resources on-chain. Meanwhile, the community’s attitude towards blockchain has shifted from being entangled in “decentralization” to a greater concern for “permissionless” and “fund security”. The boundaries between decentralized and centralized trading platforms are becoming increasingly blurred.
In the past few years, the idea represented by DEX has been a symbol of resistance against the power monopoly of CEX. However, over time, DEX has gradually begun to learn from and even replicate the core skills of the once “dragons.” From trading interfaces to matching methods, and then to liquidity design and pricing mechanisms, DEX is reshaping itself step by step, learning from CEX and even going further.
At present, after DEX has grown to be able to complete various functions of CEX, even facing suppression from CEX cannot diminish the market’s enthusiasm for its future development. What it carries is no longer just “decentralization,” but also a transformation of financial models and the changes in the “asset issuance” model it supports.
And CEX seems to be fighting back, not only developing more business channels but also attempting to bind the liquidity that originally belonged to the chain to its own system, in order to make up for the increasingly decreasing trading volume and user numbers that have been “stolen” by DEX.
The market is most creative and vibrant when filled with diverse competition, whether it’s the competition between DEX and CEX, which is the result of constant compromise between the market and “reality.” This “on-chain war” surrounding liquidity dominance and user attention has far exceeded the technology itself. It concerns how trading platforms can reconstruct their roles, capture the needs of a new generation of users, and find a new balance between decentralization and compliance. The boundaries between CEX and DEX are becoming increasingly blurred, and the future winners will belong to builders who can find the optimal path among “experience, security, and permissionless.”
