Exchanges Creating Custom Blockchains & Accepting DeFi
As user numbers decline, exchanges take action on their own
A number of prominent cryptocurrency exchanges are venturing into the fiercely competitive realm of dapp development and onboarding. This year, Huobi and Binance each introduced ecosystem funds to support the growth of dapps. With a portion of its $150 million, KuCoin is now the most recent exchange to commit to supporting developers as they expand the KuCoin Community Chain (KCC).
The KCC chain currently contains over $61 million in total value locked (TVL) and a varied ecosystem of dapps. With over 90% of the TVL on the network, MojitoSwap is the dominant player.
As of this writing, KuCoin has not said how much of the $150 million it will use to support developer expansion. KCC has stated that it will, nevertheless, develop a Layer-2 system that enables quicker transactions at a cheaper cost and switch to a cross-chain paradigm that supports applications from several blockchains. KuCoin appears to be planning to target and entice well-established dapps on other chains to migrate as part of its overall strategy.
Blockchain primer
This action is akin to the introduction of growth funds by blockchains such as Avalanche, Fantom, and NEAR, which aimed to attract new dapps to their own networks. Between the three of them, they have already invested over $600 million in dapp money, and the figures for TVL and user engagement during the previous 12 months speak for themselves.
Leading network transactions are halting as the markets oscillate in an attempt to identify levels of resistance. DeFi dapps and exchanges suffer as a result. The amount of transactions made through DeFi and exchange dapps per week was over 23 million at the beginning of 2022; as of this writing, it is just about 3 million.
GMX has had a comparatively steady Total Value Locked (TVL) over the past year, averaging $526 million per day and peaking at $607 million.
Even Nevertheless, it is not unusual to observe a decline in utilization just after bad market circumstances take hold. It will be difficult for these dapps and networks to stay relevant, and they could have to coast until things pick up again or investor confidence grows again. Thus, the decision to make efficient use of funds and leverage user acquisition. Nothing more than the “build it and they will come” approach, in theory.
The most intriguing thing to watch will be what kinds of dapps KuCoin decides to invest in and how much of them arrive on KCC in the near future. To assist expand their audiences, these networks could do well to welcome dapps from the expanding play-to-earn, games, or move-to-earn categories. Despite the decline in the cryptocurrency market, there are a lot of dapps that have grown in the last month according to the DappRadar Games Rankings. When developing a product, user counts ultimately matter more than token values in terms of long-term success.
The information above is not meant to be financial advice. This information is provided solely for educational reasons. Please be careful and conduct your own research. The author is invested in a number of cryptocurrencies, such as RADAR, ETH, and BTC.
