Exchanges Embracing DeFi & Building Custom Blockchains

DeFi Exchanges
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Amidst falling user numbers, exchanges take matters into their own hands

Several leading crypto exchanges are dipping their toes into the highly competitive dapp onboarding and development world. Huobi and Binance launched respective ecosystem funds to aid dapp development this year. Now, KuCoin has become the latest exchange to devote part of its $150 million to help developers build on the KuCoin Community Chain (KCC).

KCC chain already has a diverse ecosystem of dapps and more than $61 million in total value locked (TVL). MojitoSwap is the king of the hill and holds more than 90% of the network’s TVL. 

At writing, KuCoin has not provided any exact amount of money it would devote from the $150 million to encourage developer growth. However, KCC has said it will move to a cross-chain model that supports applications from multiple blockchains and build a Layer-2 system that allows for faster transactions at a lower fee. It sounds like part of KuCoin’s strategy will be to go after already successful dapps on other chains and lure them to port over.  

Blockchain playbook 

The move is similar to how blockchains like NEAR, Avalanche, and Fantom launched growth funds to help bring more dapps to their respective network. They have already plowed more than $600 million into dapp funds between the three, and the results speak for themselves regarding TVL and user activity over the last 12 months. 

Source: DappRadar

Transactions for leading networks are down as the markets toss and turn, trying to find resistance levels. As a result, DeFi dapps and exchanges feel the pinch. At the start of 2022, the number of transactions through DeFi and exchange dapps was around 23 million a week, dropping to approximately 3 million a week at writing. 

Source: DappRadar

While it is not strange to see a drop in usage in the immediate aftermath of bear market conditions taking hold. These dapps and networks need to fight to maintain relevance and perhaps tread water until the good times return or some investor confidence is restored. Hence, the move to utilize money effectively and leverage user acquisition. In principle, nothing more than the ‘build it and they will come’ theory. 

It will be most interesting to see what kind of dapps arrive on KCC soon, and how much KuCoin plans to allocate to such moves. Arguably, these networks would do well to embrace dapps from the growing play-to-earn, games, or move-to-earn categories to help grow their audiences. In the DappRadar Games Rankings, we see plenty of dapps with growth in the past month, despite the crypto market downturn. Ultimately user numbers are more important than token values if you’re building a product and looking for long-term success.

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The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.

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