ETH Withdrawal Frenzy in China as DEX Mining Runs Rampant
In the early morning of June 6, Chinese users found they had difficulties in withdrawing coins from some crypto CEXes (Centralized Exchange). It was reported that the ETH futures in Huobi could not be cancelled, another centralized exchange OKEx also suspended the withdrawal of ETH.
The fact is that a large number of DeFi coins like ETH are flowing out from CEX to DEX (Decentralized Exchange). Many users bought the dip during the recent ETH price dump in the centralized exchanges, and then transferred ETH for DEX mining. According to data from CryptoQuant, ETH stocks in centralized exchanges are declining rapidly.
Red-colored line shows ETH stock
On September 6, Ethereum’s reserves in CEXes stood at $12.4 billion, compared with $14.14 billion on May 12, down about 12%.
According to the data from Tokenview, the net inflow of bitcoin to the CEXes reached a peak on August 21, then gradually declines to the bottom since on September 3. On September 1, the total net inflow of the exchange CEXes by 63.83%, among which Binance, Bitfinex and Poloniex declined the most.
So far, it is not true that the CEX restricts the withdrawal of coins. The withdrawal of coins in the first and second tier exchanges is basically normal, but there may be some delay due to technical failure.
Actually, there is a complementary relationship between DeFi ecology and CEXes. Liquidity mining is a financial management mode. Apart from the “first mining”, the yield is not profitable to that of the CEXes. ” To obtain 10 times, 100 times even 1000 times of income, many people choose to trade in the secondary market of the centralized exchanges, like leveraged futures.
Now centralized exchanges has begun defense themselves, and their first choice is “Agent Mining “. Because of the complexity of liquidity mining, the “Agent Mining” is very popular among new players. For example, crypto exchanges like bigone, matrixport, Cobo have started the mode of Agent Mining, from which handling fee is charged.
Any centralized institution trying to imitate Uniswap and YFI is unlikely to succeed. Defi is closer to the classical crypto space, in which the credit comes from code and community. Centralized institutions need absolute control over interests and management, credit comes from enterprises and individuals. DEX and DeFi will continue to erode the field of CEX, but it is impossible to eliminate or imitate each other.