Changes in Chinese Exchanges in 2023

Golden Financial Reporter Jessy

In 2023, the bull-bear transition occurs. At this time, the CEX track is also facing a major reshuffle.

Binance reached a settlement with the US judicial department and paid 4.3 billion in compensation, and Changpeng Zhao resigned. OKX has always maintained the image of "making a fortune silently" in the industry. It hides behind the boss Binance and has no major negative consequences. It is at the forefront of major exchanges in the inscription craze and wallet business. Bitget, which is mainly engaged in derivatives trading, spends a lot of money on publicity, spends heavily to acquire wallets, and is a listed company holding a Hong Kong license. It has gained some popularity in the industry this year. Second-tier exchanges such as Mexc are still Maintaining the operational strategy of quickly listing coins and listing more Meme coins, it has attracted a group of customers... However, Huobi, once one of the three major exchanges, saw its market share drop sharply after changing hands.

Things have changed. After the FTX thunderstorm at the end of 2022, several major firms took away its customers. The number of Binance users was as high as 60% at the beginning of the year, but according to data provided by CCData, its market share has dropped to 30.1% at the end of this year, and is likely to decline further.

In order to obtain more trading targets, more capital, more users, more trading volume, and more trading volume. Each exchange has developed its own way of "involution". In addition to their own exchange business, various exchanges are also actively deploying the DeFi ecosystem in 2023, building a second layer and embedding wallets...

And Binance and This “settlement” by the U.S. judicial department foresees the main theme of the next development of centralized exchanges in addition to internal disputes: compliance. There is no doubt that supervision has always been the Sword of Damocles hanging over major exchanges, and it is also the biggest uncertainty faced by an exchange in its development process.

As 2023 comes to an end, Golden Finance analyzed several Chinese companies that frequently use them, including Binance, OKX, Bitget, gate, Hashkey Exchange, etc. Or the strategic layout and major events of exchanges founded by Chinese people in 2023, mainly for the domestic market. I hope to get a glimpse of the development trends of the market and exchange tracks next year.

Track overview:

According to the past of major exchanges After a year of data analysis, we came to the overall characteristics of CEX development in the past year: Binance’s lead is shrinking, and OKX is firmly in second place. The jump in market share of other exchanges was predicated on Binance’s retreat.

As the crypto market picks up and the early stages of the bull market unfold, the trading volume of centralized exchanges also surged in the fourth quarter. CryptoRank, an encryption data analysis platform, stated that although transaction volume has increased significantly, it is still only 25% of the all-time high level in Q2 2021.

According to the 2023 CEX market report released by the 0xScope team, the current top five exchanges for spot trading are Binance, Upbit, Coinbase, OKX, and MEXC. The top five exchanges for derivatives trading are Binance, OKX, Bybit, Bitget, and MEXC.

Binance

Binance’s leading advantage this year is Zoom out. The main reason behind this is that a lot of energy is spent dealing with US regulations. It has always been the number one in the decentralized exchange market and currently has 160 million users. But the market share dropped from 60% at the beginning of the year to 30%.

In 2017, China announced the withdrawal of exchanges from China on 1994, and Binance determined the development strategic goal of going overseas. At present, Binance has built a centralized exchange as the core, with the Binance Smart Chain centralized financial ecosystem as the extension, Binance Education, Binance Charity, Binance Labs, Binance Payment and Binance Credit Card, etc. A comprehensive encryption ecosystem as a derivative service of the digital currency ecosystem.

This year, Binance’s adoption of traffic strategy is still obvious. Binance Feed was renamed Binance Plaza and a large number of KOLs were invited to settle in. It’s like a discussion forum that wants to create an encrypted world like Twitter.

In terms of ecological layout, the narrative surrounding BNBchain is in full bloom. The storage side chain BNB Greenfield and the Layer 2 network opBNB were launched. Coupled with zkBNB, which was launched last year, Binance has covered storage, ZK, OP and other technology stacks in the chain's ecology. They are respectively responsible for underlying data storage processing, asset security and behavior based on zero-knowledge proofs, and high-performance The unique positioning of games and social networking builds the internal cycle and self-consistent ecology of BNB Chain.

In terms of investment, Binance Labs’ return on investment has been as high as 200 times. In this year's relatively cold primary market, Binance Labs also presents a very active VC image.

This year, Open Campus, Hooked Protocol, CyberConnect and other projects invested by Binance Labs were launched on BNB Chain, which shows that the projects it invests in are more closely tied to Binance’s ecosystem. Come deeper and deeper. A summary of Binance’s investment this year shows that it is making great efforts in social networking and games. The projects invested by Binance Labs are popular not only because as a giant in the industry, Binance’s observations and actions in this industry represent the development direction of a certain industry. It is also because there is a tacit consensus among everyone that projects invested by Binance Labs will basically be listed on the Binance exchange. For the secondary market, it is a major benefit for currency prices.

Binance is not just an exchange, it has also been at the forefront of developing technology in this industry and supporting the development of industry projects. .

The development of Binance this year and the big event for the industry is that Binance reached a settlement with the U.S. Department of Justice, admitted to anti-money laundering crimes, and compensated US$4.3 billion. , and Changpeng Zhao resigned as CEO of Binance.

For Binance, the biggest impact of this incident is that the company needs to spend a lot of energy on dealing with judicial lawsuits and the resignation of Changpeng Zhao.

Although as the industry leader, Binance has always had a very clear development plan. However, Binance has been lagging behind other exchanges in terms of the layout of this year’s hottest inscription ecology. The layout of Web3 wallet also lags behind OKX.

The departure of Zhao Changpeng actually confused employees. Uncertainty does exist regarding the future development of the company.

Whether Binance will be controlled by the United States from now on is also a point that puzzles people in the industry. Can the security of users’ personal information still be guaranteed? After all, according to an announcement issued by the U.S. Department of the Treasury, access to Binance’s books, records, and systems will be granted within five years to monitor Binance’s compliance progress.

The long-arm jurisdiction of the United States has always been the sword of Damocles hanging over Binance. Changpeng Zhao’s prison term and the outcome of the lawsuit between Binance and the SEC are still unknown.

Faced with increasingly stringent regulations from various countries, Binance has had to cut off its arms time and time again to survive. In September this year, Binance withdrew from the Russian market. Sold its business in Russia to CommEX, a newly established cryptocurrency exchange. The main reason behind this is also the ongoing investigation of Binance by the US Department of Justice.

In May this year, Binance announced its withdrawal from the Canadian market. In June, Binance stated that it would stop providing services to Dutch users because it was unable to register in the Netherlands.

In the face of Binance’s promotional activities on various social media to attract Filipino users, it was warned by the Philippine SEC: Binance has no right to sell to the public in the Philippines Sell ​​or offer securities. In June, French regulators also accused Binance of illegally providing digital asset services and engaging in money laundering, and are under investigation by the authorities.

Earlier in February, Binance was cut off from the U.S. banking system. In the crypto payment track that Binance vigorously promotes, Binance’s cooperation with traditional financial institutions is also facing many challenges after being accused of US regulation. This year, Visa and Mastercard have suspended some cooperation with Binance. Visa has since Starting in July, they stopped issuing new co-branded cards with Binance in Europe. Mastercard and Binance ended four crypto card projects in Argentina, Brazil, Colombia and Bahrain in September. It can be seen that regulatory difficulties also exist in the process of cooperation with traditional financial institutions.

However, this year Binance Pay expanded to Brazil, allowing local merchants to provide a new simplified payment method. In addition to Brazil, Binance Payment is actively entering other Latin American markets. For example, this year it launched a new product "Send Cash" in the region. Binance said that this product will allow users to pay through Binance. Pay conducts cryptocurrency transfers in nine countries in the region and allows users to transfer collected funds directly to bank accounts. In these areas, the development of traditional finance itself is lagging behind, and many people do not yet have their own bank accounts. In terms of “financial inclusion,” Binance has certainly done something in less developed parts of the world.

Over the years, Binance has been trying to obtain phased "partially legal" assets in some regions around the world through diplomacy, acquisitions, joint investments, public welfare funding, etc. identity. But that doesn’t solve the most thorny issue facing Binance—global compliance. This is also a problem faced by all exchanges.

OKX

According to data from CCData, OKX’s market The share increased from about 4% at the beginning of the year to 8% in December. According to its official public statements, it currently has more than 50 million users.

Unlike Binance, which is determined to go overseas, OKX has been closely following China’s blockchain-related policies. For example, in Hong Kong, OKX is actively deploying, and its official stated that it is committed to cultivating a strong and innovative Web3 ecosystem in Hong Kong.

OKX and founder Xu Mingxing himself have always kept a low profile in the public opinion field, and because Binance has blocked many regulatory fires, in In 2023, compared with Binance, OKX will receive much less regulatory hammer.

However, OKX also encountered regulatory difficulties during its global expansion. Like Binance, OKX also announced its withdrawal from Canada and the Netherlands.

OKX Exchange’s most eye-catching performance this year is undoubtedly the launch of its Web3 wallet and its early involvement in the inscription market. It is precisely because of taking advantage of the inscription craze that OKX Web3 wallet has become a star product. According to Dune data, the total transaction volume of the OKX Web3 wallet Ordinals market is currently close to US$1 billion, accounting for approximately 45% of the total transaction volume of the Ordinals protocol, which is close to US$2.15 billion. Binance’s Web3 wallet, which lags behind OKX in wallet business, does not yet have the inscription trading function.

Comparing the wallet functions of the two wallets, you can find that OKX’s Web3 wallet has more complete functions. This year, OKX has indeed spent a lot of money and manpower on Web3 wallet products. It can also be seen that the development of OKX exchange follows a more product-focused approach.

In November, OKX announced that it had launched a second-tier network based on Polygon. OKB will become the Gas on its chain.

Bitget, gate, Bybit, Mexc

These All exchanges have one common feature: they are in the second echelon and list coins quickly. Because some currencies have experienced astonishing increases and have a wealth effect, attracting a large number of users.

For example, Gate has made great efforts in the inscription ecology that has exploded this year, listing coins quickly, and was the first to launch BRC 20 ​​tokens. In November this year, Gate also launched its own Web3 wallet. According to its official news, its number of users is approximately 13 million. In Hong Kong, in February this year, its subsidiary Gate Digital Ltd (Gate HK) obtained a trust and corporate service provider (TCSP) license. Although it subsequently announced that it was applying for a virtual asset service provider (VASP) license, it is currently Gate is not seen on the application list.

Bitget has also made great efforts this year, mainly by spending a lot of money on publicity and investing heavily in acquisitions to expand its ecological territory. Bitget mainly focuses on the derivatives market, focusing on trading and copying. At the beginning of this year, Bitget cooperated with community leaders to promote Bitget, which achieved remarkable results. This is also the reason why it has gained some popularity this year. According to its official news, its current users have exceeded 20 million.

So, after the collapse of FTX, the derivatives trading volume of several leading CEXs declined, but Bitget achieved trading growth. This is also a result of seizing users after large-scale publicity and events.

In March this year, it announced an investment of US$30 million in the multi-chain wallet BitKeep to obtain a controlling stake. In April, it announced a $100 million venture capital fund focused on Asia. In November, its subsidiary VC Foresight Ventures acquired a majority stake in The Block at a valuation of US$70 million. Then it spent another 710 million Hong Kong stocks to invest in OSL, which currently has a Hong Kong-compliant encryption exchange license, although the price was about five times that of the direct application. However, according to analysis by industry insiders, the reason why Bitget chose to invest in OSL instead of applying for a Hong Kong license itself is that the likelihood of its application being successful is very low. It was also the day before the announcement of its investment in OSL that its Hong Kong subsidiary announced that it would stop applying for a Hong Kong license and permanently withdraw from the Hong Kong market.

Bybit official news, its users exceeded 20 million this year. According to CCData data, its market share increased from 1% to 6% this year. Slightly behind OKX. It also announced that it will establish an office in Hong Kong, but the specific progress is unclear, and its license application information has not been found. However, Bybit does not mainly target the Chinese market.

The most eye-catching thing about Mexc this year is the surge in its platform token. MX has soared from US$0.8 at the beginning of the year to a maximum of US$3.4. The current price is Around $2.80.

Hashkey Exchange

The only Hashkey exchange in Hong Kong One of the regular exchanges, backed by Hashkey Group. In August this year, it officially started trading for retail investors. However, users in mainland China cannot use it. And retail investors can currently only trade BTC and ETH on the platform.

According to reports, the exchange reached more than 120,000 registered users in November, and Weng Xiaoqi once said that the target number of registered users this year is more than 120,000. 500,000 (Hong Kong plus overseas), which shows that user growth is still difficult. According to coinmarketcap data, its spot trading volume ranks outside the 80th place.

For Hashkey Exchange, its biggest expense is the operating costs consumed while waiting for regulatory boots to be implemented. For example, in early August this year, it announced that it had been approved for the first compliance license for retail investors, and it was only in late that month that retail trading was officially launched.

The listing of its currency must also be reviewed by the Hong Kong Securities Regulatory Commission. Although there are relatively many currencies open to professional users, the Hong Kong regulatory authorities are out of concern for investors. Protection, we are still cautious about listing coins for retail investors.

In November, Hashkey Exchange officially launched the platform currency HSK. According to Hashkey Exchange insiders, the platform will expand into more overseas compliance markets next year.

Summary:

In the process of sorting out exchange information, you will find that major The opacity of information and data in centralized exchanges is very obvious. Except for one or two exchanges at the top who are usually willing to disclose and announce some content. Other exchanges are willing to disclose very little information. The "black box" situation of centralized exchanges is still serious.

However, the development of the industry is in a good direction. It is precisely because of the thunderstorm of FTX that disclosure of reserve certificates and protection funds have become standard. , but this does not guarantee absolute safety.

From the development of centralized exchanges in 2023, we can see that the centralized exchange itself is no longer just a trading platform, it is actively investing in Various crypto projects are developing, and they are getting involved: building their own chains, or participating in the incubation of popular projects. The entry of centralized exchanges into the wallet track is also a major new development this year. After all, the "traffic entrance" of the wallet seems to be a perfect fit with the huge traffic pool of the exchange.

And next year, with the continuous entry of supervision, compliance will definitely remain a main line in the development of centralized exchanges next year, and the days of brutal expansion will have to stop. Stop, with the arrival of the bull market, the industry has attracted more and more attention, and the footsteps of supervision will only get closer.

From the fact that the inscription track is booming this year, we can also see the role that centralized exchanges play in fueling the flames. Next year, the role that centralized exchanges will play in the development of a certain track cannot be underestimated. With investments from TON such as MEXC and Foresight Ventures, and Binance’s strong support for Gamefi and Socialfi, we can see that next year, Socialfi and Gamefi, which are at the intersection of the Web2 and Web3 fields, will definitely be promoted by the exchange in all aspects. Ushering in a big explosion and leap-forward development.

And what changes will happen to the exchange next year? Can Binance still maintain its position as the industry leader? The bull market is here and anything is possible.