Can exchanges achieve a win-win situation with NFT under the new trend?

Can exchanges achieve a win-win situation with NFT under the new trend?

Last year's popular decentralized finance (DeFi) wave made many cryptocurrency investors who did not "get on board in time" regret it. The total locked-in amount of DeFi soared from US$5 billion to more than US$60 billion in just one year, and the more than 12-fold increase shocked many people. However, starting this year, a new wave began to sweep the cryptocurrency market, which is: NFT (non-fungible token).

As a new type of digital asset, NFT has become the next hot spot in the blockchain industry. It is a digital asset that you can truly own and truly manage. By creating NFT, you can build a token with immutable proof on the blockchain ledger, which records the attributes of the token's origin, time, and scarcity. The token will point to a file that may be a picture or video. The process of creating an NFT is called "minting", and anyone can create an NFT on some so-called "token minting" platforms.

Cryptocurrency can be generally divided into two types based on its "homogeneous" attribute, namely, homogeneous tokens (FT) and non-homogeneous tokens (NFT). The former can be interchangeable, infinitely split, and cannot be distinguished during the transaction transfer process; the latter has a unique and unique identifier, which is not interchangeable between each other, and the minimum unit is 1 and cannot be divided. Due to its unique attributes, NFT can be combined with identity ID, certificate, identity ID, ticket, artwork, pet collection, card, game props, virtual real estate, and many other financial scenarios. It is the imagination space presented by these usage scenarios that makes NFT an entry point for blockchain applications to connect with the real world.

NFT and exchanges will eventually achieve a win-win situation

At present, blockchain has gradually formed a completely digital global market. After data assetization, if you want to achieve circulation and transfer pricing, there is actually no more suitable and effective market mechanism than blockchain.

The emergence of NFT provides a new and unique way of value production for on-chain digitalization. In the short term, NFT asset chain mainly realizes the digital confirmation and circulation of online virtual property represented by artworks; in the medium term, some traditional assets including stocks, private equity, and even real estate are also likely to be chained through NFT; and in the long term, combined with the application of the oracle system, we will find that this may greatly accelerate the process of physical assets from asset chain to asset store transformation, thereby further improving the value Internet.

At this stage, the scale of NFT audience and transaction volume is still relatively small, while the scale of exchange users is relatively large. According to a set of data, the total number of global cryptocurrency users has exceeded 1 trillion in January this year, of which the number of Bitcoin users is about 71 million and the number of Ethereum users is about 14 million. If the exchange diverts some users to NFT, it will inevitably "stimulate" the rapid growth of this field. On the other hand, most centralized cryptocurrency exchanges are relatively compliant. Under the perfect KYC policy, they can better avoid bad trading activities such as transaction fraud and effectively solve some problems. More importantly, NFT will actually bring more fresh "blood" to centralized cryptocurrency exchanges, especially users in many new fields such as art and sports will also be attracted to cryptocurrency exchanges, which will further expand the user base of exchanges and ultimately achieve a win-win situation.

In the future, massive assets will be transferred on the blockchain network, so exchanges will inevitably play a larger and more important role in this development process. Just like when centralized cryptocurrency exchanges entered the DeFi industry, when exchanges enter the market, they will inject more vitality into the NFT market.

Centralized exchanges actively participate in the NFT craze

Centralized cryptocurrency exchanges (CEX) lagged behind in the DeFi boom last year, leading to the emergence of a number of highly competitive decentralized exchanges (DEX) in the market. These decentralized exchanges seized the market trend and successfully got a share of the crypto market. A set of data shows that at the time of writing this article (March 8), the total 24-hour transaction volume of DEX reached US$8,614,607,789, accounting for 4.8% of the total cryptocurrency transaction volume.

However, this year, centralized cryptocurrency exchanges obviously do not want to miss out on NFTs and have begun to launch their “spring layout”. At this stage, traditional centralized digital currency exchanges that have participated in the layout of NFT projects have all started listing NFTs.

We found that some NFT exchanges, similar to the first batch of DEXs spawned by the "DeFi craze" in the early days, have also appeared in the crypto market, mainly including art collection exchanges, player card collection exchanges, game exchanges, virtual world exchanges, etc. In February, we can see that the interest in NFTs in the crypto market is rising sharply, with a total transaction volume of US$342 million. At the time of writing this article, the market value of NFTs has reached US$11,108,478,062, and the 24-hour transaction volume has reached US$3,432,461,421, accounting for 0.7% of the total transaction volume of cryptocurrencies. Although the current NFT share seems low, its huge potential has attracted industry attention.

In fact, since most users are not familiar with on-chain operations, the threshold for trading NFT assets is relatively high. Centralized NFT trading venues will greatly reduce the trading threshold for NFTs, bringing a more friendly and ultimate NFT asset trading experience. Centralized trading platforms will also become an important channel for popularizing the concept of NFTs, market education, and liquidity expansion, promoting the popularization and promotion of NFTs.

It has been 12 years since the birth of Bitcoin. The digital token economy urgently needs to be "connected" with the physical world. Today, tokens are mostly used in the community, but in the future they will definitely connect the world and form a digital asset world with interconnected value and information.

Although the current market attention and influence of NFT are not high, NFT has great application potential and has a lot of room in the fields of insurance, bonds, options, etc., and even has the hope of creating a virtual real world on the blockchain. In the context of global digital transformation, NFT will play an irreplaceable role in the future blockchain ecosystem, and may even become the key driving force and cornerstone for many industries to achieve digital economic transformation. For exchanges, how to seize opportunities under the new trend and use it to promote the development of the digital economy is worth in-depth thinking.