Exchanges are Open Finance

Exchanges are notable profit centers in the industry but are often overlooked as sources of innovation. Kyle Samani of Multicoin Capital believes that as a central source of liquidity exchanges are poised to offer ancillary services outside of trading. Lending, banking, staking, and other services are already being added to exchanges and open finance protocols are accelerating the features that exchanges can offer. As capital and services continue to be aggregated under exchanges Samani believes regulatory concerns will lead to the need for decentralization, and the centralized companies of today could be the DAOs of tomorrow.

Why it matters:

• Samani hits on a theme we are seeing play out today. Binance and Bitfinex have both created in-house DEXs while Coinbase acquired Paradex to provide decentralized trading. As exchanges move more of their tech stack towards blockchains it will become easier to plug into, or fork, protocols that offer additional services.
• Exchanges generate massive revenues. If this thesis proves out and exchanges become DAOs we could see a token model (exchange tokens) with true value accrual.