For the last few years, cryptocurrency exchanges have been relying on the Ethereum blockchain to readily list new tokens. While centralized exchanges like Binance and Kucoin list other coins as well, they are known to list Ethereum tokens more often. This is mainly because of how quick and efficient it is to list them, as nowadays they are almost always ERC-20 compatible.
Decentralized exchanges also do the same for similar reasons. In fact, almost all decentralized exchanges are specifically designed to only accept ERC-20 tokens. While this behaviour may favour some traders, it has annoyed many others who would like more variety in the market. Ethereum may have the lion share of tokens running on its blockchain, but if exchanges only focus on Ethereum then the industry misses out on other impressive blockchain projects.
Building a public chain
A great deal of exchanges are bothered by this situation too, leading some to even develop their own public blockchains. It is common knowledge that Binance is building their own decentralized exchange, but they’re not the only ones. OKEx and Huobi are doing the same too.
While the idea of exchanges creating their own chains may seem like a new revelation, RightBTC was already doing this as of 2016. Having their own public chains means that these exchanges can exert a higher autonomy over their actions without having to worry about whether Ethereum can support them.
It also means that exchanges no longer inadvertently give Ethereum free publicity. For instance, when new Ethereum tokens are listed on an exchange, it helps the Ethereum network grow, and while this is no bad thing, exchanges figured out that they could capitalize on the situation for their own gain instead.
By using their own public chains, exchanges are able to spread the word about their own products and potentially get people to adopt them.
The development of separate public chains provides the ultimate freedom as blockchains can be designed to meet any and all specific needs that organizations may have. Ethereum is versatile, but it acts as a jack of all trades; specialized blockchains can handle the needs of exchanges in a more focused way as it is their only purpose.
This move away from Ethereum is long overdue; no one blockchain should have a monopoly over an entire industry. The inclusion of more public chains means that more variety is being brought to traders and enthusiasts. It also shows the versatility and strength of blockchain technology as a whole. The more companies there are experimenting with blockchain technology, the more the community get to experience what it has to offer.
Disclaimer: Koinalert’s content is only for information purpose in nature and should not be considered as investment advice. Do your own market research before investing in any cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.