The revelation of unethical practices by FTX in its bankruptcy filing has created panic among investors who are already losing trust in these centralized trading firms. Exchange outflows hit historic highs of 106,000 BTC per month in the wake of the FTX fiasco, and the loss of confidence in centralized exchanges (CEXs) has pushed investors toward self-custody and decentralized finance (DeFi) platforms.
Users have pulled money from crypto exchanges and turned to noncustodial options to trade funds. Uniswap, one of the ecosystem’s largest decentralized exchanges (DEX), registered a significant spike in trading volume on November 11, when FTX filed for bankruptcy.
While DeFi protocols have seen a significant bump in the aftermath of centralized exchange failures, the nascent ecosystem has been a prime target for hackers in 2022.
According to data from crypto analytics group Chainalysis, nearly 97% of all cryptocurrency stolen in the first three months of 2022 has been taken from DeFi protocols, up from 72% in 2021 and just 30% in 2020.
DeFi platforms might have their own set of vulnerabilities and risks. Still, industry observers believe that proper due diligence and reducing human error could make the nascent ecosystem of DEX platforms a go-to option over CEX platforms.
Sources: https://cointelegraph.com/
