What Strategic Thinking Lies Behind the Competitive Embrace of “On-chain Ecosystems” by Exchanges Like Binance and Coinbase?

CEX-on-chain Wave

Strategic Differences of Three Major Exchanges

Seizing the Entrance of the Next “On-chain Trend”

A large part of the current bull market liquidity revolves around meme coins and AI concept coins, with the main battlefield shifting from centralized exchanges (CEX) to on-chain. Additionally, the explosive growth in trading volume of native DeFi derivatives platforms like Hyperliquid and Aevo has led to CEX losing market pricing power, users, and liquidity. If CEX does not adapt, it will inevitably miss out on the next wave of funds and traffic. To cope with these changes, many CEX have started strategic layouts, extending their reach to the on-chain ecosystem, opening up the current wave of “CEX-on-chain” trend.

According to Ash, this model combines:

– CEX user experience, trust, and brand advantages
– DeFi transparency, openness, and innovation speed

Exchanges are not simply imitating DeFi, but are using their unique resources to establish a semi-open, verified on-chain ecosystem with the goal of attracting traditional users to enter the on-chain market, retaining existing users, and most importantly, “seizing the entrance position for the next wave of fund inflows.”

Currently, exchanges actively expanding this model include Coinbase, Binance, and Bybit, with slight differences in their product strategies.

1. Coinbase: DEX + KYC Verification Pool

– Launching DEX function based on its Base chain, allowing trading of any on-chain assets
– Introducing KYC verification fund pool, enabling institutions to participate (legally compliant)
– Combining “DeFi openness” and “TradFi regulation”

2. Binance: Binance Alpha Project

– Establishing a “sandbox-style on-chain new coin discovery platform”
– Supporting multiple chains (ETH, BSC, Solana, Sui, etc.)
– New coins are tested here and may be promoted to officially listed projects on Binance in the future
– Users can participate in emerging token investments without leaving Binance

3. Bybit: Byreal (Solana Ecosystem)

– Built on Solana’s RFQ (Request for Quote) and CLMM (Concentrated Liquidity) mechanisms
– Simulating the low slippage experience of centralized exchanges
– Attracting funds to stay long-term with fair launch fund pools and profit mechanisms

Ash believes that centralized exchanges (CEX) are quietly evolving into “gateways and accelerators” for the decentralized finance (DeFi) world, rather than the role of trying to suppress on-chain innovation in the past. At the same time, he also observes that the on-chain trading solutions launched by major CEX like Coinbase, Binance, and Bybit have three common characteristics: reducing the usage threshold through familiar Web2 interfaces and trust frameworks, allowing users to explore, trade, and manage on-chain assets on the platform, and introducing an “observation period” and review mechanism to avoid risks like rug pull and attacks.

In summary, these strategies demonstrate that CEX has realized that price discovery and fund movement are gradually shifting to on-chain. Instead of missing the opportunity, it is better to actively become the entrance and accelerator of the on-chain ecosystem, thereby continuing to strengthen its influence and market control during the rise of DeFi.