Business competition, revenue pressure, CEX is seizing the future on-chain.

When the "iron rice bowl" is broken, CEX has started the on-chain war.

Written by: BUBBLE

Centralized trading platforms are undergoing a collective directional adjustment. From Coinbase's investment of nearly $2.9 billion to acquire the derivatives trading platform Deribit, and collaborating with Shopify to promote the adoption of USDC among physical merchants. To Binance launching the Alpha program to reshape the primary market pricing mechanism. Then to Kraken acquiring NinjaTrader to expand into the options market, and partnering with Backed to develop "U.S. stock" business. Meanwhile, Bybit has also opened trading for gold, stocks, foreign exchange, and even crude oil indices on its main site.

Leading trading platforms are actively expanding their sources of revenue, attempting to achieve multi-dimensional business "supplementation" from off-chain to on-chain, from retail to institutional investors, 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 DEX routing on the Base chain, aiming to break down the liquidity barriers between CeFi and DeFi, and reclaim the trading share that has been siphoned off by on-chain protocols like Hyperliquid.

However, behind these actions is the continued pressure on the actual revenue capacity of trading platforms, as crypto 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 reliant on the more volatile altcoin sector. Meanwhile, operating costs have not decreased, reaching as high as $1.3 billion in the first quarter of 2025, nearly matching revenue. Binance is also facing the challenge of declining trading fees, as reported by TokenInsight, its average trading fee revenue since the end of 2024 has reached a three-year low, although it still leads in market share.

Binance's trading volume has been mostly sluggish over the past year, source: coingecko

The trading fee space has been compressed, on-chain liquidity continues to be diverted, and traditional brokers are reshaping compliance to enter the market. These intertwined forces are pushing CEX to transform into "on-chain platforms." Well-known KOL ASH analyzed on X that as more and more DEX improve their trading mechanisms, products are emerging that can almost rival CEX in user experience, while the trading process is more transparent. CEX has finally begun to notice this and is shifting its strategic focus to a permissionless model, with multiple CEXs launching a battle for the "on-chain CEX" market.

###OKX Focuses on Infrastructure Development

In the OKX annual letter dated December 30, 2024, OKX founder Star Xu expressed his firm belief that "true decentralization will drive the mass 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 structured centralized trading platforms for on-chain infrastructure, aside from Binance. It does not launch a wallet or feature sporadically, but instead builds a Web3 operating system that can replace centralized scenarios through "full-stack development," creating a closed loop with CEX users' assets.

OKX has continuously advanced its on-chain infrastructure in 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 functions such as Swap, NFT, DApp browser, inscription tools, cross-chain bridge, and yield vault 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 bridges the gap between centralized accounts and on-chain identities. Due to its comprehensive components, many newcomers who joined the crypto 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, back in 2020, but this chain has not received strong market endorsement. However, to support the chain's development, 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 an ecosystem support fund, OKX is forming a complete on-chain ecosystem. Although OKX has never publicly disclosed the total investment amount, considering 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 US dollars.

###Binance Alpha, Realizing Reputation and Liquidity

In 2024, the cryptocurrency market welcomed a bullish prosperity stimulated by the approval of Bitcoin spot ETFs and the meme frenzy. Although liquidity has significantly rebounded on the surface, hidden behind this prosperity is the gradual failure of the pricing mechanism between the primary and secondary markets. Project valuations are continuously inflated during the VC stage, the token issuance cycle is repeatedly extended, and the participation threshold for ordinary users is consistently raised. 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-position takeovers after the "opening peak."

It is under such market conditions that Binance launched Binance Alpha on December 17, 2024. Originally just an experimental feature in the Binance Web3 wallet for exploring high-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 acknowledged in a Twitter Space responding to community controversies that there is a structural issue of "peak at launch" in the listing process on Binance, and admitted that the traditional listing mechanism has become difficult to sustain under the current trading volume and regulatory framework. In the past, Binance attempted to correct the pricing imbalance after new coin listings through 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 scope. Since its launch, Alpha has introduced over 190 projects from various chain ecosystems such as BNB Chain, Solana, Base, Sonic, and Sui, gradually forming an on-chain early project discovery and incubation platform led by Binance, providing an experimental path for the trading platform 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 the broader Web2 community have gotten involved. The decent returns have led many to mobilize their entire families, companies, and even whole villages to participate.

Although the competition has become increasingly intense, there have been similar situations like the sharp decline of tokens such as ZKJ after their alpha launch, raising concerns about their "compliance." The community has mixed opinions on it, with well-known KOL thecryptoskanda praising Alpha. He believes that Binance Alpha is the second great innovative activity of Binance after Binance IEO, and analyzes its role in the ecosystem, stating that "the historical mission of Binance Alpha is to dismantle the primary pricing power of North American VCs like A16Z and Paradigm, which can raise funds from tradfi at almost no cost, and reclaim the Binance system. It also aims to eliminate the shanzhai token listing market of other trading platforms to prevent the possibility of similar events like Grass causing a loss of interest on platforms like Bybit, while converting all the capital locked in various chains into Binance's capital through BSC. Alpha has successfully accomplished these three goals."

###Coinbase Connects to DEX, Major Players in the Platform Give Back to Base

Following in the footsteps of Binance and OKX, Coinbase has also begun its own integration into the on-chain ecosystem. Their initial strategy is to incorporate DEX trading and verified liquidity pools. At the recent 2025 Cryptocurrency Summit, Coinbase's Vice President of Product Management, Max Branzburg, announced that DEX integration on the Base chain will be incorporated into the main Coinbase application, with DEX trading embedded in future applications.

Trade any on-chain tokens through Base's native routing and wrap them as KYC-verified liquidity pools, allowing institutions to participate as well. Coinbase now has over 100 million registered users, with 8 million active trading users each month, 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% on Coinbase. Starting in 2024, the trading volume of institutional clients on Coinbase has been steadily increasing (Q1 2024 trading volume was $256 billion, accounting for 82.05% of total trading volume). As Coinbase integrates DEX on Base, the breadth of DeFi combined with TradFi's compliance standards should be able to introduce substantial liquidity for tens of thousands of tokens on the Base 链上. More importantly, a large number of products in the Base ecosystem will have the potential to be compliant with real-world pathways through Coinbase.

The largest native DEX on Base, Aerodrome, has also become a hot topic for 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 divided into two parts. Well-known KOL thecryptoskanda is not optimistic about Coinbase's strategy. In discussing Binance Alpha, he believes that Coinbase is merely imitating Binance Alpha; opening the app to buy Base on-chain assets is just scratching the surface. However, KOL deconstructor 0xBeyondLee thinks this is not the same concept as Binance Alpha. "Alpha has an access mechanism; not just any coin can be listed. Coinbase's rhetoric is that all Base assets can appear. It's as outrageous as being able to trade shares of the fruit stand downstairs directly on Tonghuashun. In terms of both liquidity and attention, the gain for the Base chain is unprecedented."

Coinbase's attack 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 begin to sell the $Hype he has held since the TGE. He further explained that Hyperliquid currently has about 10,000 to 20,000 active users daily, with a total user count of about 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.

However, 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. But when Coinbase and Robinhood both announced that they would launch perpetual futures products in the U.S., it will be a huge blow to Hyperliquid, with a large portion of its core users likely to turn to Coinbase or Robinhood. Coinbase, with a safer and more convenient access method, no need for self-custody, no complicated DeFi UX, and the full support of regulatory agencies like the U.S. Securities and Exchange Commission (SEC), can attract most traders who do not care about decentralization; as long as it is safe and user-friendly, they will use it.

###Byreal, Bybit's on-chain doppelganger

Bybit's actions in the on-chain war are more "restrained" compared to Binance and OKX, as it does not create its own chain or build its own Rollup. It only lightly advances around three directions: "user entrance," "on-chain trading," and "fair issuance."

First, Bybit has been promoting the independence of its Web3 brand since 2023, launching the Bybit Web3 wallet, which integrates core on-chain functions (Swap, NFT, inscriptions, GameFi) for users. The wallet includes 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 generated much excitement.

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 Revenue Vault (Revive Vault). It is reported that the testnet will launch on June 30th. The mainnet is expected to be released in Q3 2025.

Bybit has also launched Mega Drop on its main site, which has already gone through 4 phases. It adopts a model where users can automatically obtain project tokens through staking, with current estimated returns of around 50 USD per phase for a stake of 5000 USD, although this varies 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 recent wave of decentralized derivatives ignited by Hyperliquid has 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 moving "on-chain," while on-chain protocols continuously simulate the centralized matching experience. From Binance Alpha's reclamation 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 just a technical competition; it is a struggle for user sovereignty and control of liquidity.

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 channel. 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, thus opening the path for derivatives in decentralized trading platforms. After 5 years of market development, the emergence of Hyperliquid has liberated the potential of this field. So far, Hyperliquid has accumulated over $30 trillion in trading volume, with a daily average trading volume approaching $7 billion.

With the emergence of Hyperliquid, decentralized trading platforms have become a force that centralized trading platforms cannot ignore, and the stagnation of trading players has been exacerbated 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 first priority is to reclaim the "throttling" strategy for contract players flowing into on-chain activities. From Binance to Coinbase, major centralized trading platforms are integrating their on-chain resources. Meanwhile, the community's attitude towards blockchain has shifted from being entangled in "decentralization" to most people caring more about "permissionless" and "fund security", causing the boundaries between decentralized and centralized trading platforms to become 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 borrow from or even replicate the core techniques 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 in the face of suppression from CEX, the market's enthusiasm for its future development cannot be diminished. It carries not only "decentralization" but also a transformation of financial models and the changes in the "asset issuance" model behind it.

And it seems that CEX has also launched a counterattack, in addition to developing more business channels, it attempts to bind the liquidity that originally belonged to the on-chain to its own system, in order to make up for the 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, it's a result of the 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 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 be those builders who carve out the optimal path among "experience, security, and permissionless."