NFT and DEX, who has made whom?

In April 2021, the entire cryptocurrency market is warming up calmly all the way. A series of events such as Bitcoin’s breakdown of $60,000, DeFi lock-up volume approaching 100 billion U.S. dollars, the surging NFT boom, and the successful landing of Coinbase on Nasdaq have excited practitioners in the cryptocurrency market. As a new wave of cryptocurrency after DeFi, NFT has seen explosive growth in 2021, and its total market value exceeded US$30 billion in mid-April, setting a record high.

After being listed as an established cryptocurrency exchange, Coinbase announced that it will also explore NFT as a potential new business line. Although Coinbase CFO Alesia Haas did not disclose when Coinbase will provide NFT, nor whether it will build a native NFT trading platform or act as a NFT resale channel, one thing is very clear. That is, centralized cryptocurrency exchanges have begun to extend their tentacles to the NFT field. After all, driven by interests, everyone wants to pour in and get a share of this big cake.

However, the problem now is that centralized exchanges still have some shortcomings in the NFT field and cannot perfectly fit NFTs. For example, there are not many exchanges that support efficient cross-chain and multi-chain services, and the limited token exchange function cannot meet the diverse needs of users, which leads to constraints on the convenience of NFT transactions; in addition, due to the high gas fee on the Ethereum chain, users When conducting NFT transactions on centralized exchanges, it is often necessary to pay more fees and wait for a longer confirmation time.

The head centralized cryptocurrency exchange explores to solve the pain points of the NFT industry

In order to solve the above-mentioned problems, some head centralized cryptocurrency exchanges such as Binance, Huobi and OKEx have begun to try to explore solutions to the pain points of the NFT industry on DEX based on the exchange’s public chain.

At this stage, the public chains of the three major exchanges mentioned above are all undergoing rapid development. Among them, Binance Smart Chain pays more attention to applications, Huobi Eco-Chain focuses on improving financial stability and throughput capacity while maintaining security, while OKExChain focuses on the optimization of asset circulation, cross-chain, and transactions on the decentralized exchange chain. Program. In terms of NFT, the advantages of the exchange’s public chain are relatively more obvious. Not only can it bring the most valuable “smooth transaction” support for the NFT, it can also “share” the exchange’s public chain resources to the NFT project.

In addition, the layout strategies of the three major exchanges in the NFT field are also different: Binance moves frequently in the direction of NFT investment and cooperation. Although its Binance Smart Chain lowers the barriers for developers to use, it also attracts many NFTs. The project is on the chain, but the crypto community believes that Binance seems to be “copying and pasting” the NFT on the Ethereum to a large extent, resulting in unsatisfactory reputation in the industry; a number of NFT projects have been launched on the Huobi Heco ecological chain. Obtained a relatively optimistic lock-up volume; Ouyi OKEx focuses on the NFT empowerment of decentralized exchanges.

As NFT began to lead the cryptocurrency industry to “out of the circle”, we found that encrypted applications can actually be introduced into the physical world and combined with real-world scenarios, while NFT has naturally become a blockchain application landing and docking with the real world. Of an entrance. Although there is a saying that “everything can be NFT”, there is no value without transactions. Only transactions can be valuable. Value needs to be reflected by transactions. The lower the transaction efficiency, the lower the liquidity and value. The current NFT market is precisely because of the lack of high-frequency trading venues that still have major limitations in the application scenarios. At present, NFTs can only be seen in a few traditional industries such as games and art collections.

Therefore, if there is no platform that supports high-frequency trading, even if “everything” is converted into NFT, it is meaningless. From this perspective, a decentralized trading platform based on the public chain of an exchange can solve it perfectly. The current “low-frequency trading” problem encountered in the development of the NFT industry. Generally speaking, the exchange public chain not only focuses on the implementation of encryption-related business applications, but also ensures the security of decentralized transactions, and at the same time, it can maximize the needs of high-frequency trading in different trading scenarios such as NFTs, and will always be safe Put first and pay the most attention to user experience, providing customers with diverse assets, safe and reliable smooth transactions.

How much do you know about the “benefits” that NFT brings to DEX based on the exchange public chain

After meeting the NFT, the decentralized trading platform based on the exchange public chain has indeed been working hard to help the NFT get rid of the shackles, solve the NFT industry problems, and promote the development and empowerment of the NFT. However, in fact, decentralized trading platforms based on the public chain of exchanges do not always “pay” as people see, but also get a lot of “benefits” from NFT. For a decentralized trading platform based on the public chain of an exchange, whoever can first discover the “benefits” brought by NFTs will be able to gain the upper hand in market competition.

On the decentralized trading platform of the public chain of the exchange, not only can the NFT test blind box airdrop campaign be launched, but each blind box can also randomly issue a different card. The biggest difference from other “traditional” NFTs is that these NFTs not only have collection and game attributes in the “traditional” sense, but also possess holding value, which is given real economic value. NFT holders can participate in a series of activities such as receiving rewards from the fixed dividend pool of handling fees, platform governance projects, launching new projects, and sharing platform profits based on their own weight.

We know that the platform currency is a token issued by a cryptocurrency exchange and circulated within the trading platform. Most of its application scenarios are inside the exchange, which can essentially be regarded as a liability of the exchange. NFT holders are equivalent to the “shareholders” of the trading platform. Not only can they build an ecosystem together by participating in the community, they can also share platform development results to achieve true decentralized governance, and these “economic values” are ordinary platform currencies. incomparable.

Currently in its infancy, decentralized trading platforms will still focus their main service functions on trading and providing liquidity, and the weight of NFT transactions may remain at a relatively low level, but this innovative NFT economic value enabling mechanism is bound to Will “feed back” users of the decentralized trading platform. In addition, the top cryptocurrency exchanges including the “three major exchanges” have a large number of users participating in transactions every day. In addition, the mainstream cryptocurrency exchanges have a large user scale and are easy to switch to decentralized trading platforms. Although the NFT project party It can also be used on other trading platforms, but for those users who are accustomed to the “exchange ecology”, the stickiness of the platform will be relatively higher, which will ultimately promote the further growth of the number of NFT trading users on the decentralized trading platform.

to sum up

These innovative explorations made by the decentralized trading platform in the NFT field are just the beginning, and may have a profound impact on the NFT ecosystem. And from its examples, it can be seen that NFT can bring fresh blood to the decentralized trading platform based on the exchange public chain, and it is also easier to attract “outside the circle” and “ecological” users, and ultimately achieve a win-win situation.

The NFT world is full of vitality and has great potential. With the continuous improvement of cryptocurrency infrastructure such as decentralized trading platforms based on the public chain of exchanges, many new ideas and new projects related to NFT will accelerate their implementation, and they will become revolutionary Subversion becomes mainstream.

Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.