FTX: Hive Needs To Focus Upon Decentralization

in LeoFinance4 months ago

By now, most involved with cryptocurrency heard about the situation with FTX and Binance. Basically, we witnessed the battle of the exchanges.

FTX is being taken over by Binance. Many are claiming CZ plotted a shrewd takeover. Whatever the events that led up to this conclusion, there is a lesson in this for everyone.

As we repeatedly wrote, decentralization is crucial. Here is simply another example of cryptocurrency becoming even more centralized. Binance was already the largest exchange out there. Now, we can presume its control only expanded.

For Hive coins, this doesn't have much impact. In fact, for years we heard claims how we need to get listed on centralized exchanges. Perhaps we are seeing how this is not the case.

Centralized exchanges are on and off ramps to fiat. This is something that most need to realize. The not your keys, not your crypto is really becoming evident. Storage of coins and tokens on exchanges is a risky proposition.

If Hive is going to be one of the leaders in decentralization, it has to carry the torch at all level.


Leader In DeFi

Hive should strive to be the leader in decentralized finance (DeFi). As covered in the past, this means operating from a technological standpoint where the infrastructure is decentralized. We see this with both the base layer in place and some layer 2 solutions being constructed.

Here is another example of where Hive has to focus its efforts upon decentralization.

A part of the DeFi process is to make Hive coins, $HIVE and HBD, as basic currencies. This means that those coins, or derivatives of them, are involved in the process fully. Instead of being housed on centralized exchanges, we need the attention paid to things such as decentralized exchanges (DEX) and liquidity pools. Fortunately, Hive has its own internal exchange where both the base layer coins are traded.

The concept of the Hive Financial Network brings this concept to life. By utilizing a decentralized node system at the second layer, we can build a host of financial products, all tied to HBD. Here again we see the idea of a DEX being constructed, allowing for the swapping of these coins. The key will be to integrate "wrapped" versions of other coins and tokens.

Liquidity pools are another factor in all this. These are a basic feature of DeFi. Here we see people staking their coins or tokens. This provides the liquidity for trading, offering up a host of opportunities such as arbitrage.

Finally, presenting different forms of the coins, the transformation, also builds resiliency. This is another way to expand the reach along with use case of the coins (HBD in particular) while reducing the dependency upon centralized exchanges.

Ultimately, the goal is to only engage with them when swapping to or from fiat currency.

Eliminating Vulnerabilities

The situation with FTX showed how vulnerable things can be. Not only was the token tied to that project manipulated, a host of others on the platform were put at risk. This not only affects things from an individual level as wallets are frozen, it also affects the supply and demand equation as the ability to transact is eliminated, even if just temporarily.

Decentralization by definition reduces risks. In this, vulnerabilities are eliminated. Since options are put forth, we can see how the attack vectors are eliminated over time. That does not mean all will cease to exist. Others will always crop up. It is why decentralization is an ongoing process.

To be honest, few are thinking about this. It is not a mindset that most in cryptocurrency and blockchain have. We know the primary focus is upon price and as long as things keep going up, people are happy. They are not concerned about the long term implications of supporting projects that will ultimately hand more power to the existing system (or at least those players).

We need to start with a totally different approach. Simply replicating the operations of the traditional financial system will end up with the same results. The power will end up in the hands of a few entities with everyone else at risk. This will make for a system that is expensive to participate in, further alienating smaller, start up projects.

Hive can offer something different. There seems to be a core that is intent of ensuring decentralization and the principles that are tied to it survive. We see this in some of the latest developments.

It is one of the few blockchains that can offer a true decentralized database that anyone can utilize. This is a big step in some of the discussion taking place right now. While Musk claims to have the solution, he is just a different gatekeeper.

Of course, as we are seeing, this has to extend all the way to our coins and how they are traded. Relying upon centralized exchanges is not healthy. Hive should take a different approach. In all likelihood, we are going to have to build it ourselves. This not only applies to the infrastructure but also use cases. That is alright since we are the ones responsible for creating the economy tied to our two coins.

This is where the value will come from.

As time passes and more announcements like FTX-Binance emerge, people will start to realize the value Hive is offering. It might take a while but the walls are closing in on many projects.

Hive can solve this.

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Binance taking over FTX and becoming the most dominant centralized exchange just reflects the mentality of this crypto businesses are what they are really after. It all happened within a week but it seems that it was planned a long time ago. How many projects has Binance invested into? It will probably be just a matter of time before a similar story of 'Binance takeover' emerges again.

Cantargue with the mentality. You are right. It is the same as in the non-crypto world. Leveragee being used to excess...sounds like bankers to me.

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Is Hive going to eventually come to a point where every project is running their own decentralized nodes? Kind of like Splinterlands with their node licenses. Or will it just be something like DLUX where people run those nodes and that decentralizes everything on the second layer? Did Hive-Engine launch their own nodes a while ago too?

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Based upon my understanding of what is being built, I think there will be nodes people use and really dont know who is running them.

That is how the entire decentralized things could form.

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I dont think CZ will end up getting his hands on FTX. FTX is a failling company - not sure CZ would like anything to do with it, sadly enough.

He pulled out today it seems.

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Call it a lady's hunch. 😄

It’s pretty much a done deal.

Where u here that? Nope! ⬇️


We are witnessing another market crash showing us why opting for decentralization is the better choice. Binance is expanding its centralized power, we should be learning from this, and like you mention CEXs should serve as on and offramp cryptocurrency other than that leaving funds on CEXs are not the smartest of ideas.

The crypto space is evolving, mistakes are being made, am sure we are going to get better over time and especially on Hive where we seek decentralization.

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How many more years will it take for people to understand that they need to use decentralized exchanges? By the way, Bitshares is still beautiful...

Some are just focused on price which is a disappointing aspect of crypto as we seek adoption.

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Greed is at hte core of all this.=, just like always.

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DEX will have to be the norm if we are going to see DeFi.

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Hive should eliminate all vulnerabilities and become fully decentralized. I know hive is one of those few coin that are very close to decentralization but we can tighten things up.

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It is a process. We are seeing things step ahead. It is difficult to do overnight though.

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Excellent article as always. Descentralización is KEY. CEX are bank poor regulated. The damaged made by this two exchange is BIG. Thanks for your article is always a pleasure to reading you.

If Hive is going to be one of the leaders in decentralization, it has to carry the torch at all level.

Hive has every chance to do that. Hive should lead the way. Hive has multiple advantages over other blockchains. For example free and fast transactions. Hive has user-friendly addresses (account names). This is also an advantage.

Harsh times and there is a waterfall of causality out of what is happening in this space. FTX seems to go down fast and I think Solana will soon follow. Only the unstaking period stops it from an abrupt drop and we will see that in a few days. Decentralization is critical, and I must appreciate Cardano where the tokens aren't leaving your wallet even when staked.

People need to understand the value of o counterparty risk.

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This ⬆️ 💯

It’s amazing 2 me how many people are still shocked by these events. We just see a massive destruction of on paper value unfortunately during these processes. That said long term we will see and need the pain to get to the other side and decentralization. I think the leg lower could be far further from here as we see more of this but long run we will be better off.

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We have to get this done. I know it takes time. But I hope this is being worked on by someone.

Things are being worked on. It is a daily basis thing. No way to do it all at once.

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Would be nice though 😉


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It's been takeovers and crash since January and projects without spine are tainting the integrity of crypto in its entirety. CZ's move is unthinkable. It's obvious that Hive is the solution to most of the issues contemporary crypto projects are facing. It's still back to the issue if breaking through and showing people what we can offer.

There is a lot of interesting stuff taking place.

The repeated lesson is how leverage exposing companies to a lot of bad things.

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It just reminds me that any centralized exchange is a bad thing right now because we are in a bear market right now. I don't know how many of these exchanges will survive and I do agree that a decentralized exchange with a sustainable model is what we need. Until then, I don't trust any exchange.

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Apparently SBF has filed for personal bankruptcy .. heard

This move will make Binance to have more power and control over the crypto market. This is not a good thing!


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100% Spot on

Seems the drama between FTX and Binance took another turn again, in any case great points about the need for decentralization, one thing that I think needs more work is to decentralize the bridges between crypto's, including the bridges between Hive and Swap.Hive on Hive-engine, the sidechain is quite decentralized now with witness nodes, but keeping Hive in escrow and printing or burning swap.hive is still centralized, I do not have a solution for that though, thanks for sharing and stay awesome.

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The key sentence in the article is this:
"Simply replicating the operations of the traditional financial system will end up with the same results."

In the offline world, centralization, aka Too Big To Fail (TBTF), is the goal for most big swinging dicks (BSD) in the finance world.
And the BSDs want to own it all. On Hive, and with Hive, that is pretty much impossible.

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Here comes the fun!

The situation with FTX showed how vulnerable things can be. Not only was the token tied to that project manipulated, a host of others on the platform were put at risk. This not only affects things from an individual level as wallets are frozen, it also affects the supply and demand equation as the ability to transact is eliminated, even if just temporarily.

Very true..so many lessons to learn from it..