Speculating on cryptocurrencies dominates the crypto space, with exchanges emerging as the biggest winners. Since the advent of blockchain technology, various application scenarios have been widely discussed, including decentralized finance (DeFi), non-fungible tokens (NFTs), blockchain games, the metaverse, and more. However, looking back at the history of the crypto space, it is not difficult to find that the core application that truly occupies the market for a long time and stably is speculation on cryptocurrencies. Because of this, the infrastructure surrounding cryptocurrency speculation—cryptocurrency exchanges—has become the most stable and profitable winner in the crypto space.

Why can the exchange sector continue to win? First of all, the demand for trading itself is the most original, basic, and eternal demand in the crypto space. Whether it is project fundraising, institutional arbitrage, or retail speculation, all participants ultimately cannot avoid basic services such as cryptocurrency trading and contract trading. As long as the market is volatile, there will inevitably be trading demand, and exchanges happen to be at the core of this ecosystem, continuously gaining traffic and transaction fee revenue.

Secondly, exchanges have a natural profitability. Compared to other on-chain applications, the business model of exchanges is very direct and clear: regardless of market fluctuations, exchanges can achieve stable profits through trading fees. In a bull market, trading volume surges, and fee income increases significantly; in a bear market, exchanges can maintain profit levels through derivatives, leveraged trading, and other tools.

In addition, exchanges also have a very high moat. The moat of exchanges is reflected in user traffic, brand recognition, and technological barriers. Once users settle down in a particular exchange, the cost of migrating assets, trading habits, and trust relationships is extremely high, and this user stickiness is far greater than that of other on-chain applications. Moreover, the brand trust accumulated by leading exchanges over the long term makes it easier to attract and retain new users.

More importantly, exchanges hold the pricing power and discourse power of the crypto space. No matter how popular a project is, it will ultimately be listed on the exchange. By controlling the listing rules, trading pairs, and liquidity supply, exchanges effectively have huge ecological influence, and can even to some extent influence the direction of the crypto market and market rhythm.