FTX has fallen. The collapse of crypto’s second-largest exchange is one of the biggest highlights of 2022. This event is a milestone that marks the importance of transitioning from centralization to decentralization. Here’s what went down, our stance:
The Collapse of FTX
The rise and fall of FTX is a cautionary tale for anyone investing in cryptocurrencies through a centralized exchange. Sam Bankman-Fried, (also known by his initials, SBF), founded FTX in 2019. It quickly became one of the largest exchanges in the world. However, things took a turn in November 2022 when the balance sheet of Alameda Research, a crypto investing firm that was also owned by SBF, was published by CoinDesk. The paper showed that Alameda held a huge amount of FTT (a token created by FTX). And if the price of the crypto were to drop, the firm would collapse.
Following the leak of the balance sheet, the CEO of Binance, the world’s largest crypto exchange and a rival of FTX, announced that the company would sell off all its FTT tokens. The market went chaotic as people started panicking about the future state of FTX. Consequently, these events led to FTX pausing withdrawals due to a lack of liquidity.
Things proved worse and worse as time went on. For example, it was revealed that SBF had built a “secret backdoor” for moving crypto without alerting anyone. Binance intended to “bail out” the exchange by acquiring it. However, Binance reversed its decision when it discovered FTX was mismanaging user funds and displaying opacity in its operations.
Eventually, SBF resigned as CEO and filed for bankruptcy for FTX alongside his other companies. US authorities are now investigating the FTX collapse and executives’ involvement.
Centralized exchanges like FTX are failing us
Centralization-related issues with Centralized Exchanges are not new. For example, in March 2022, Coinbase locked out 25,000 Russian-linked wallets. Binance once restricted Nigerian wallets. Bitmart lost $200 million and froze user assets. KuCoin lost $275 in user funds due to a hack in 2020. And plenty of more similar instances took place this year alone.
Essentially, centralized exchanges are getting “shaken out” because they’re bringing with them broken, traditional finance systems that crypto and blockchain are meant to get away from. FTX’s meltdown resembles a typical “virtual bank run.” The eminent bank’s insolvency caused customers to rush to get their money out before it ran out of cash, which it did.
The collapse of the second largest crypto exchange proves to be a case study for people to be very cautious with their crypto. No centralized exchange is too big to fail.
Centralized Exchanges (FTX, Coinbase & Binance) vs. DEXs
The most popular exchanges are centralized, which means they control your crypto. If you want to trade or withdraw funds from an exchange, you must go through a KYC process and sometimes, wait days for a transaction to clear. That’s where a DEX (Decentralized Exchange) comes into play.
A DEX is where you can trade crypto without third parties. But there are plenty of DEXs out there claiming to be “decentralized,” and more often than not, these platforms don’t live up to their promise. So your crypto becomes the target of hackers, the lunch of exit scammers, or the escape money of bankrupt exchanges on the brink of ruin (like FTX)! Centralized exchanges also come with a high risk of colluding with outsiders and manipulating end-user funds.
We stand for Decentralization
Everything that’s been going on recently with the collapse of FTX is exactly why we hold true to our principles of what we’re building here at Peerplays. Decentralized exchanges are more valuable than ever. The principles that guide Peerplays emphasize how crucial it is to support decentralization as a way to safeguard everyone’s freedom and sovereignty. The systems in place today accomplish the exact opposite by restricting people. We’ll continue to build, grow, and provide the tools necessary to help people become more free and sovereign.
Decentralization is the heart of our DEX. It’s one of our core values. Our north star! Unlike FTX, our platform’s built-in wallet allows you to keep your assets and trade them whenever you wish while maintaining full ownership of your private keys. Your assets are always right in front of you. Additionally, you can view what’s been bought or sold, and manage open orders seamlessly. Simply put, everything is transparent and your assets remain in your control.
The Peerplays’ DEX is different from other DEXs because it supports cross-chain swaps using decentralized support for chains like Bitcoin, Hive, and soon – Ethereum. The Peerplays DEX is the perfect place for people who care about decentralized capabilities as users have the power to trade at any moment without moving assets (the wallet is built into the DEX).
A DEX Built With You in Mind
It’s extremely unfortunate that today’s crypto generation had to learn the lesson of ‘Not your keys, not your coins’ in this manner. But fortunately, users have alternatives.
Peerplays’ DEX is created with you, the end-user, in mind. We’re committed to building a world where users have impeccable safety and no worries about the bankruptcy of an exchange. A world where an ‘FTX moment’ does not occur.
We are dedicated to empowering people’s freedom to create greater outcomes, giving them control over how they own and collaborate worldwide. The core foundation for Peerplays success in 2023 relies primarily on the release and promotion of mechanisms incorporating decentralized ID, gamification, and ‘handshake’ like onboarding that is easily accessible to people who use smartphones. At Peerplays, we are on a mission to revolutionize the world of blockchain technology and empower individuals with the freedom to take control of their digital lives. To achieve this ambitious goal, we are constantly on the lookout for the most talented individuals who share our passion for innovation and our commitment to decentralization. If you believe in the transformative potential of blockchain technology and are eager to contribute your skills and expertise to this groundbreaking project, we want to hear from you.