Centralized trading platforms are undergoing a collective directional adjustment. From Coinbase’s nearly $2.9 billion acquisition of the derivatives trading platform Deribit, to its collaboration with Shopify to promote the use of USDC in physical merchant transactions. Then there’s Binance launching the Alpha program to reshape primary market pricing mechanisms. Kraken has acquired NinjaTrader to expand into the options market and partnered with Backed to develop “U.S. stock” business. Meanwhile, Bybit has also opened trading for gold, stocks, foreign exchange, and even crude oil indexes on its main site.

Leading trading platforms are actively expanding their sources of revenue, trying to achieve multi-dimensional business “supplementation” from off-chain to on-chain, from retail to institutions, and from mainstream coins to altcoins. At the same time, these platforms are also extending their reach into the on-chain ecosystem. Taking Coinbase as an example, its main site has already integrated the DEX routing on the Base chain, aiming to break down the liquidity barriers between CeFi and DeFi, and to reclaim the trading share that has been siphoned off by on-chain protocols such as Hyperliquid.

However, behind these actions is the continued pressure on the actual revenue capacity of trading platforms, as cryptocurrency trading platforms are facing unprecedented development bottlenecks. Coinbase’s latest financial report shows that its trading fee revenue has halved from $4.7 billion in 2024 to $1.3 billion in Q1 2025, a quarter-on-quarter decrease of 19%; among which, the trading volume of BTC and ETH has dropped from 55% in 2023 to 36%, with the revenue structure increasingly relying on the more volatile altcoin sector. Meanwhile, operating costs have not seen a decline, reaching as high as $1.3 billion in just the first quarter of 2025, nearly matching revenue. Binance is also facing the challenge of declining trading fees. According to a TokenInsight report, its average trading fee revenue from the end of 2024 to now has hit a three-year low, although it still leads in market share.

Binance’s trading volume has been in a sluggish state for most of the past year, source: coingecko

The trading fee space is being compressed, on-chain liquidity continues to be diverted, and traditional brokers are reshaping their compliance to enter the market. These intertwined forces are pressuring CEX to transform into “on-chain platforms.” Well-known KOLASHAs more and more DEX improve their trading mechanisms, giving rise to products that can almost rival CEX in user experience, but with a more transparent trading process, CEX has finally begun to notice this and shift its strategic focus to a permissionless model. Multiple CEX have initiated a competition in the “on-chain CEX” market.

OKX focuses on infrastructure development

In the OKX annual letter dated December 30, 2024, OKX founder Star Xu expressed strong belief that “true decentralization will lead to the widespread adoption of Web3” and is committed to building a bridge between traditional finance and decentralized finance.

This statement is not without basis; OKX is currently one of the earliest and most systematically laid-out centralized exchanges for on-chain infrastructure, apart from Binance. It does not launch a wallet or feature sporadically, but instead builds a Web3 operating system that can replace centralized scenarios through a “full-stack development” approach, creating a closed loop with CEX user assets.

OKX has been continuously advancing its on-chain infrastructure strategic development over the past two years, attempting to transform from a centralized trading platform into a core participant of the Web3 operating system. One of its key focuses is the OKX Wallet (a non-custodial wallet supporting over 70 public chains), which integrates functionalities such as Swap, NFT, DApp browser, inscription tools, cross-chain bridges, and yield vaults in the Web3 sector.

OKX Wallet is not a single product, but the core hub of the OKX Web3 strategy. It not only connects users with on-chain assets but also opens up the channel between centralized accounts and on-chain identities. Because its components are comprehensive enough, many newcomers who joined the crypto space around 2023 first encountered on-chain usage through 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 the chain did not receive strong market acclaim. However, to support the development of the chain, OKX simultaneously launched basic components such as a block explorer, developer portal, contract deployment tools, and faucet services to encourage developers to build DeFi, GameFi, and NFT applications within its ecosystem.

In addition to continuously hosting hackathons and launching ecosystem support funds, OKX is forming a complete closed-loop on-chain ecosystem. Although OKX has never publicly disclosed the total amount invested, 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 dollars.

Binance Alpha, the monetization of reputation and liquidity

In 2024, the crypto market witnessed a bull market boom under the dual stimulus of the approval of the Bitcoin spot ETF and the meme frenzy. Although liquidity has significantly rebounded on the surface, what lies behind the prosperity is the gradual failure of the pricing mechanism between the primary and secondary markets. Project valuations remain inflated during the VC stage, the token issuance cycle is repeatedly extended, and the participation threshold for ordinary users continues to rise. When tokens finally go live on trading platforms, it often serves as an exit for project teams and early investors, 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. Originally just an experimental feature in the Binance Web3 wallet for exploring quality early projects, it quickly evolved into a key tool for Binance to reshape the on-chain primary market pricing mechanism.

Binance co-founder He Yi publicly admitted during a Twitter Space responding to community controversies that there is a structural problem of “peak at opening” in the listing of coins on Binance, and candidly stated that the traditional coin listing mechanism is difficult to sustain under the current trading volume and regulatory framework. In the past, Binance attempted to correct the pricing imbalance after new coins were listed by using methods such as 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 existing token listing system within a controllable range. Since its launch, Alpha has introduced over 190 projects from multiple chain ecosystems including BNB Chain, Solana, Base, Sonic, and Sui, gradually forming an on-chain early project discovery and warming platform led by Binance, providing an experimental path 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 it has even broken into the broader Web2 space. The impressive returns have encouraged many to mobilize their entire families, even entire companies or villages to participate.

Although there is an increasing competition now, there have also been cases like ZKJ and other tokens that plummeted after going live on alpha, raising concerns about their “compliance.” The community has mixed opinions on this, with well-known KOLs.thecryptoskandaHe has great appreciation for Alpha, believing that Binance Alpha is the second greatest innovative activity of Binance after Binance IEO. Analyzing its role in the ecosystem, he states, “The historical mission of Binance Alpha is to dismantle the primary pricing power of North American VCs such as A16Z and Paradigm, which can raise funds from tradfi with almost no cost, and reclaim the Binance system. It also aims to eliminate the copycat listing market of other trading platforms to prevent the emergence of similar issues like Grass on platforms such as Bybit that could lead to a loss of attention, while turning all the capital sunk in various chains into Binance’s capital through BSC. Alpha has successfully accomplished these three goals.”

Coinbase connects to DEX, and the big players within are supporting Base.

Following in the footsteps of Binance and OKX, Coinbase has also begun its own integration into the on-chain ecosystem, with an initial strategy to connect to DEX trading and verified liquidity pools. At the recent 2025 Cryptocurrency Summit, Coinbase’s Vice President of Product Management, Max Branzburg, announced the integration of DEX on the Base chain into the main Coinbase application, with future applications incorporating DEX trading.

Trade any on-chain tokens through Base’s native routing and package them as KYC-verified liquidity pools, enabling institutional participation. Coinbase now has over 100 million registered users, with 8 million active trading users monthly, and according to Coinbase’s investor report, the value of customer assets on its platform is $328 billion.

Retail trading accounts for only about 18% of Coinbase, and starting in 2024, the trading volume of Coinbase’s institutional clients has been steadily increasing (Q1 2024 trading volume was $256 billion, accounting for 82.05% of total trading volume). With the integration of DEX on Base, the breadth of DeFi combined with TradFi’s compliance standards should be able to bring significant liquidity to tens of thousands of Base on-chain tokens. More importantly, the vast array of products in 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 Coinbase main site, it has risen by 80% in the past week, with a market cap increase of nearly 400 million dollars.

The community’s attitude towards this is also divided into two parts, well-known KOLthecryptoskandadoes not have a positive view on Coinbase’s strategy. When discussing Binance Alpha, it believes that Coinbase is merely mimicking Binance Alpha, and that opening the app to buy Base on-chain assets is just scratching the surface. But KOL deconstructor.0xBeyondLeeI believe this is not the same concept as Binance Alpha. “Alpha has an access mechanism, not just any coin can be listed. The rhetoric of Coinbase is that all Base assets can appear. It’s like being able to directly trade the equity of the fruit stand downstairs on Tonghuashun, which is absurd. In terms of both liquidity and attention, the gain for the Base chain is unprecedented.”

And Coinbase’s assault on on-chain liquidity doesn’t stop there.the_smart_ape“On social media, he stated that due to Coinbase’s actions, he will begin 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 base of around 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 and cannot trade perpetual contracts. However, when Coinbase and Robinhood both announced the launch of perpetual futures products in the US, it will be a huge blow to Hyperliquid, as a significant portion of its core users may turn to Coinbase or Robinhood. Coinbase, with its safer and more convenient access, no need for self-custody, no complicated DeFi UX, and full support from regulatory agencies like the SEC, can attract most traders who do not care about decentralization; as long as it is safe enough and easy to use, they will use it.

Byreal, Bybit’s on-chain Doppelgänger

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 advancement around three directions: “user entry”, “on-chain trading”, and “fair issuance”.

First, Bybit is promoting the independent branding of Web3 starting in 2023 by launching the Bybit Web3 wallet, which introduces users to the core on-chain functionalities (Swap, NFT, inscriptions, GameFi). The wallet integrates capabilities such as a DApp browser, airdrop activity pages, and cross-chain aggregation trading, while supporting EVM chains and Solana, aiming to become a lightweight bridge for CeFi users to migrate to the on-chain world. However, with the “intensification” of competition in the wallet market, the project has not sparked a surge of interest.

Bybit has shifted its focus to on-chain trading and issuance platforms, launching Byreal, which is deployed on Solana. The core design concept 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 Launch (Reset Launch) and Yield Vault (Revive Vault). The testnet is reportedly set to launch on June 30, 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 already gone through 4 phases. The model involves automatically obtaining token airdrops for staked projects. The current estimated return is about 50 USD for each phase if you stake 5000 USD, but the returns vary depending on the quality of the projects.

Overall, Bybit’s strategy in the on-chain war is to “use lower development costs and leverage existing public chain infrastructure” to build a bridge connecting CeFi users with DeFi scenarios, and to expand its on-chain discovery and issuance capabilities through components like Byreal.

The wave of decentralized derivatives triggered 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, with centralized platforms actively “going on-chain,” while on-chain protocols continuously simulate the centralized matching experience. From Binance Alpha reclaiming primary pricing power, to OKX building Web3 full-stack infrastructure, to Coinbase leveraging compliance to reach the Base ecosystem, and even Bybit establishing its own on-chain doppelganger through Byreal, this “on-chain war” is far more than a technical competition; it is also a struggle for user sovereignty and liquidity dominance.

Ultimately, who can occupy the commanding heights 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 path for decentralized trading platforms. After 5 years of market development, the emergence of Hyperliquid has unleashed the potential of this field. To date, Hyperliquid has accumulated over $30 trillion in trading volume, with an average daily trading volume approaching $7 billion.

With the breakout of Hyperliquid, decentralized trading platforms have become a force that centralized trading platforms can no longer ignore. The stagnation of trading players, combined with the diversion caused by decentralized trading platforms led by Hyperliquid, has prompted centralized trading platforms to urgently seek the next “growth anchor point.” In addition to expanding “open-source” strategies related to stablecoins or payments, the top priority is to reclaim the “throttling” strategies for contract players flowing into on-chain. From Binance to Coinbase, major centralized trading platforms are starting to integrate their on-chain resources. Meanwhile, the community’s attitude towards blockchain has shifted from being entangled in “decentralization” to a greater concern for “permissionlessness” 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 borrowed from and even replicated the core techniques of the once “dragons.” From the trading interface to the matching methods, and then to liquidity design and pricing mechanisms, DEX is gradually reshaping itself, learning from CEX, and even going further.

At a time when DEX has grown to be able to perform various functions of CEX, even facing suppression from CEX cannot diminish the market’s enthusiasm for its future development. It carries not only “decentralization” but also a transformation of financial models and the changes in the “asset issuance” model behind it.

However, CEX seems to be counterattacking. In addition to developing more business channels, it also attempts to bind the liquidity that originally belongs to the on-chain to its own system, in order to compensate for the increasingly diminishing trading volume and user base being “stolen” by DEX.

The market is most creative and vibrant when filled with diverse competition. The competition between DEX and CEX is the result of constant compromise between the market and “reality”. This “on-chain war” over liquidity dominance and user attention has far surpassed the technology itself. It concerns how trading platforms can reshape 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 increasingly blurred, and the future winners will be the builders who find the optimal path among “experience, security, and permissionlessness.”

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