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Coinbase’s Latest Crash Only Heightens The Need For More DeFi Projects

Another day, another Coinbase crash – right when users needed the exchange. 

After a sharp Bitcoin rally up to $10,000 over the last few days, the flagship cryptocurrency plummeted 10% in just a matter of minutes.

Crypto holders who were looking to sell or buy during the crash on Coinbase were met with an outage, an event that’s eerily becoming more common as the exchange faces stress and high volume.  

Another Outage, And More Outrage

While Coinbase said the incident was resolved a few hours later, a growing number of people in the cryptocurrency world remain worried about the exchange’s stability in busy times. 

At the end of April, Coinbase experienced a similar outage right as Bitcoin rose to, and past $9,000. Data provider Skew found volume on Coinbase was not extra high in comparison to other peaks over the past two weeks. 

As expected, the internet cryptocurrency community was not happy. One Reddit user opinioned Coinbase as a “good on ramp for new people into crypto. That’s about all it’s good for.” 

Another wrote how they didn’t understand “how a platform goes down every single time the market moves more than 5%.” 

Ominous Signs On The Horizon For Centralized Organizations

Bitcoin volatility and high trade volumes were expected around the time of the cryptocurrency’s halving in mid-May, the third occurrence since the cryptocurrency’s creation.

Amid price swings and volatility surrounding Bitcoin, the vulnerability and complexity of centralized organizations like Coinbase becomes abundantly clear. 

Worse, insidious hackers who are able to break inside centralized exchanges like Coinbase can cause immense damage, and pilfer countless amounts of cryptocurrencies from users in one fell swoop.  

Coinbase’s recent issues points to an important lesson – it’s time for the cryptocurrency community to embrace DeFi (decentralized finance) projects and smart-contract based services.  

Providing A Sound Solution In A Complicated Financial Landscape? 

DeFi aims to turn the current financial system on its head by giving people the opportunity to directly interact with protocols based on decentralization, security, and transparency.

Instead of basing trust in human hands, DeFi projects cultivate security based on code. Data recording across thousands of nodes nearly eliminates concerns of corruption. 

Speculation is DeFi projects could continue to surge in the mainstream as people continue to lose trust in the traditional banking sector and search for ways to integrate 1.7 billion unbanked adults into the global financial ecosystem. 

Just in Q1 alone, the transaction volume for DeFi projects based on Ethereum surged by 778%.

An Emerging Decentralized Financial Marketplace 

Many DeFi projects are still in the research or pre-launch phase. A few have been going strong for a few years, and the collection of DeFi platforms ranges from trading platforms, derivatives, and crowdfunding. 

Aave, a decentralized lending platform, acquired $30 million in locked assets in just a few months after its January 2020 debut. Trading platform DDEX reached $4.3 million in locked assets at the start of April. Erasure, a platform that allows users to bet cryptocurrencies on predictions, saw their locked assets grow to nearly $1.2 million by the end of March.  

Betting platforms like Decibet and AlphaPlay are a fast riser in the decentralized financial world. AlphaPay gives users the ability to bet on which cryptocurrency (Bitcoin, Ether, Tron, or EOS) will rise or fall the most in a five-minute interval. Everyone can try the game with 1000$ demo money.

AlphaPlay is selling tokens in a series of rounds from April 26th until August 8th 2020, with a hard cap of $4,000,000. Token owners are acquiring 6% of the platform’s turnover as bonuses. 4% of the turnover users are getting for inviting their friends on AlphaPlay. The remaining token amount (90%) users winning as prizes. 

Time To Move Away From Centralization?

Continued woes from centralized exchanges like Coinbase are convincing more and more people that the future is centralized around smart-contract based services and DeFi projects.

Crypto content creator Rachel Siegel warned followers after Coinbase’s latest outage to “move to non custodial wallets,” since it “surely will not be the last” time Coinbase goes down. 

As DeFi platforms of all stripes continue to gain steam, and the world sees the success of projects like AlphaPlay, Aave, Decibet, and DDEX, it’s clear the crypto community needs to think about the next generation of projects that hinge on decentralization.

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