Author: Chi Anh Ryan Yoon, Source: Tiger Research
Strategic Differentiation: Binance offers retail-focused on-chain services designed to lower the entry barrier for Web3. Bybit launched an independent platform, ByReal, to provide CEX-level liquidity on-chain. Coinbase adopts a dual-track model, targeting retail and institutional users.
Why CEX is turning to on-chain: As early tokens are increasingly debuted on decentralized exchanges (DEXs), centralized exchanges face listing delays due to regulatory audits - losing trading volume and revenue. On-chain services enable them to participate in early token flows and retain users without a formal listing.
The future of CeDeFi: Platform boundaries are blurring. Exchange tokens are evolving from fee discount tools to core assets that connect centralized and decentralized ecosystems. Some DeFi protocols may be absorbed into larger CEX-dominated networks, accelerating the formation of an integrated hybrid market.
Binance’s recent initiative, Binance Alpha, has become the focus of the market. Operated by the Binance team, Alpha serves as a DeFi-based listing platform that enables retail users to access early tokens faster than traditional exchange channels. This greatly improves the accessibility and participation of tokens, especially through mechanisms such as Alpha Points, which promote targeted airdrops to users.
However, the model is not without controversy. Several tokens listed through Alpha saw sharp price drops shortly after launch, sparking debate over the structure and intentions of the program. Despite mixed reviews, one trend is clear: centralized exchanges are no longer spectators in the DeFi ecosystem - they are now active participants.
This shift is not limited to Binance. Other major platforms are also moving on-chain. For example, Bybit recently announced ByReal, a DeFi platform based on Solana. Coinbase has also revealed plans to integrate on-chain services directly into its application. These developments point to a broader structural shift underway in the exchange industry.
The key question is: Why would centralized exchanges, which have long relied on a stable, revenue-generating business model, enter the inherently volatile DeFi market? This report analyzes the strategic rationale behind this shift and examines the market dynamics driving this evolution.
Before analyzing the strategic motivations of centralized exchanges entering the DeFi space, it is first important to clarify what they are actually building. While these efforts are often grouped under the broad trend of “CeDeFi” (centralized-decentralized finance), implementation varies significantly across platforms.
Bybit, Coinbase, and Binance each take a different approach—with differences in architecture, asset custody models, and user experience. Understanding these differences is critical to evaluating their respective strategies.
On June 14, Bybit announced ByReal as an on-chain extension of its exchange infrastructure. The main goal is clear: replicate centralized exchange-level liquidity in an on-chain environment. To do this, Bybit uses a hybrid design that combines a request for quote (RFQ) system with a centralized liquidity market maker (CLMM) model.
The RFQ mechanism allows users to request quotes from multiple brokers before executing a trade, enabling price optimization through professional market makers. The CLMM model concentrates liquidity within the active trading price range, improving capital efficiency and reducing slippage - all key factors in approximating the CEX trading experience on-chain.
At the same time, ByReal remains decentralized at the user level. Assets are self-custodied through Web3 wallets such as Phantom, and the platform includes a token launchpad for new project issuance. It also provides yield-generating capabilities through its Revive Vault, including Solana staking products such as $bbSOL.
Bybit's strategic intent through ByReal is to create a parallel liquidity layer for early-stage tokens that may not meet the listing standards of their main exchanges, but which can thrive in a more open, community-driven environment. While the model is similar in structure to Binance Alpha, ByReal differentiates itself by integrating the launchpad functionality and yield products into a more comprehensive service.
At the 2025 Crypto Summit, Coinbase announced plans to integrate DeFi transactions directly into its main application rather than through a standalone wallet. The core of this strategy is to provide a seamless user experience. By enabling DEX trading in the core application, users can access and trade thousands of tokens from the moment the asset is minted without leaving the Coinbase interface.
While access to DeFi is already available through the standalone Coinbase Wallet, the company launched a key differentiating feature: Verified Pools. These pools are only open to institutional participants that have passed KYC (Know Your Customer) verification, providing a safe and compliant environment for entities with regulatory obligations.
Ultimately, Coinbase has formed a complex dual-track strategy: serving retail users through smooth, integrated on-chain access, while providing institutional users with a regulated, high-assurance liquidity venue. This allows the company to cover both user groups while maintaining a balance between user experience and compliance.
Among the three major exchanges, Binance Alpha is the most retail-oriented product. Unlike other platforms that focus on decentralization, Binance prioritizes ease of use. Alpha can be accessed directly through a tab in the Binance main application, allowing users to trade without leaving the familiar interface.
Although all transactions are processed on-chain, users interact with Alpha through their existing Binance accounts, without having to set up a separate wallet or manage mnemonics, which greatly reduces the entry barrier for Web3 novices.
Although the three major platforms are moving closer to the CeDeFi model, their paths are significantly different. Bybit targets DeFi native users through a fully decentralized architecture and advanced liquidity mechanisms; Coinbase adopts a dual-track strategy to serve both retail and institutional customers through differentiated infrastructure; while Binance focuses on driving mass adoption by simplifying Web3 complexity.
Each exchange is exploring its own trade-offs in asset custody, product curation, and integration depth, together shaping the diverse entry points of this evolving CeDeFi ecosystem.
The first reason is straightforward: CEXs want priority access to popular tokens, but they cannot list them fast enough.
Most new tokens are now issued directly on decentralized exchanges (DEXs), where permissionless listing mechanisms and widespread attention drive rapid trading volume growth. However, even when CEXs clearly see user demand, they are often unable to list these tokens immediately due to restrictions such as legal review, risk management, or regional compliance.
This delay carries real opportunity costs. Trading volume flows to decentralized platforms like Uniswap, and CEXs lose listing fee revenue. More importantly, users begin to associate token discovery and innovation with DEXes rather than CEXes.
By launching their own on-chain products, CEXs have created a compromise solution. Platforms like ByReal and Binance Alpha act as semi-sandboxed venues: tokens can be traded without going through formal listing channels, but still in a controlled and brand-safe environment. This allows exchanges to monetize user activity through exchange fees or token issuance mechanisms at an early stage while maintaining legal arm’s length. Exchanges provide access channels but do not directly custody or endorse these assets.
This structure provides CEXs with a way to participate in token discovery while avoiding triggering regulatory responsibilities. They are able to both capture liquidity and generate revenue while directing activity back into their own ecosystems — all while waiting for the formal listing review process to catch up.
The second driver stems from user behavior. Despite DeFi’s leadership in token innovation and capital efficiency, it remains difficult for mainstream users to easily access. Most users are reluctant to manually transfer assets across chains, manage wallets, approve smart contracts, or pay unpredictable gas fees. Despite these obstacles, the most attractive opportunities (such as new token listings, yield strategies) are increasingly happening on-chain.
CEXs (centralized exchanges) have identified this gap and responded by embedding DeFi access directly into their platforms. All of the CEX integrations mentioned above allow users to interact with on-chain liquidity through a familiar CEX interface. In many cases, exchanges completely abstract away wallet management and gas costs, making it as easy for users to access DeFi as they would with Web2 applications.
This approach achieves two goals. First, it prevents user churn. Traders who might otherwise move to a DEX (decentralized exchange) can now stay within the CEX ecosystem even if they use DeFi products. Second, it strengthens the platform’s defensibility. By controlling the access layer, and eventually the liquidity layer, CEXs build network effects beyond spot trading.
Over time, this translates into a user lock-in effect for the platform. As users become more sophisticated, many will seek cross-chain routing, yield products, and trading strategies. If a CEX has its own DEX infrastructure, Launchpad layer, or even a dedicated chain (like Coinbase’s Base), it can ensure that users, developers, and liquidity are firmly bound to its ecosystem. User activity is tracked, monetized, and recycled, rather than flowing to third-party protocols.
In fact, on-chaining enables CEXs to control the full lifecycle of user funds: from fiat deposits, to DeFi exploration, to eventual token listings and exits - all in a unified and revenue-generating system.
The expansion of large centralized exchanges (CEX) to the chain marks an important inflection point in the evolution of the crypto industry. CEX no longer regards DeFi as an external phenomenon, but begins to build its own infrastructure, or at least ensures direct access to the user layer.
As CEX integrates on-chain services, the boundaries between "exchanges" and "protocols" are becoming increasingly blurred from the user's perspective. A user who uses Bybit to trade on-chain tokens may not even realize whether he is interacting with a decentralized protocol or a centralized interface. This convergence may significantly reshape the liquidity architecture, product design, and user flow of the entire industry.
Institutional behavior will also be a key observation point, but a comprehensive capital influx is unlikely to occur in the short term. Institutions remain cautious, mainly because some risks have not yet been resolved: regulatory uncertainty, smart contract vulnerabilities, token price manipulation, and opaque governance mechanisms.
The launch of on-chain services by exchanges does not eliminate these structural risks. In fact, some institutions may view exchange-intermediated DeFi access as a new layer of intermediary risk. Realistically, early attempts are likely to come primarily from hedge funds and proprietary trading firms, which deploy small-scale capital to experiment. More conservative players, such as pension funds or insurance companies, are expected to remain on the sidelines for the next few years. Even if they participate, they are likely to adopt an extremely cautious allocation approach - typically no more than 1-3% of their portfolio.
Against this backdrop, predictions of "billions of dollars in capital inflows" appear overly optimistic. A more realistic outlook is a gradual test in the hundreds of millions of dollars. However, even these modest inflows may enhance market depth and mitigate volatility to some extent.
As exchanges continue to expand their on-chain services, the functionality of native exchange tokens will also evolve. Holding a certain amount of these tokens may bring users discounts on on-chain fees or unlock yield opportunities through staking and liquidity incentives. These changes could introduce new utility for exchange tokens, but also new volatility.
Currently, Binance is the only major platform that provides clear and sustained utility for its native token (BNB), which plays an active role in multiple services. Most other exchange tokens are still limited to basic fee discounts.
As the CeDeFi infrastructure matures, this will change. As exchanges operate integrated on-chain and off-chain platforms, their native tokens will become the link between the two worlds. Users may need to hold exchange tokens to participate in staking, Launchpool, or get early access to newly launched projects - whether centralized or decentralized.
This expansion of functionality allows exchange tokens to go beyond mere utility assets, and they will become core assets in vertically integrated ecosystems. Exchanges with existing tokens may significantly enhance the utility of their tokens, while exchanges that have not yet issued tokens may consider launching new tokens to support DeFi-related services. This is especially likely for platforms that develop their own blockchains or differentiated DeFi layers.
In short, exchange tokens are evolving from simple fee-collecting tools to strategic assets that will play a key role in user retention, protocol integration, and cross-platform capital flows.
CEX’s push for the expansion of on-chain services is more than just a defensive strategy; it reflects a positive bet on the future of the crypto ecosystem. Exchanges no longer view DeFi as a threat, but rather as a neighboring field that can be integrated or even absorbed.
The most likely scenario is convergence. Major exchanges will increasingly operate semi-decentralized networks, and independent DeFi protocols may find themselves dependent on these growing ecosystems, or even integrated into them. This could ultimately lead to a redistribution of power and liquidity, with CEX-dominated platforms becoming the center of gravity for DeFi activity.
This trend could lead to a more unified market structure, with liquidity flowing freely between centralized and decentralized environments. Users will be able to choose a combination of trust, transparency, and convenience based on their preferences. The competitive landscape is changing, and Bybit’s launch of ByReal may be an early sign of this hybrid future taking shape.
Avalanche has launched a free NFT Battle Pass that lets players earn rewards across multiple blockchain games in one place. It aims to boost player engagement and unify its gaming ecosystem as the wider crypto gaming market struggles.
WeatherlyOpenAI has signed a $200 million deal with the US Department of Defense, expanding its role in government tech. The agreement launches “OpenAI for Government,” a new division focused on public sector partnerships.
KikyoBrazil has scrapped its monthly tax exemption for crypto profits, introducing a flat 17.5% capital gains tax on all digital asset transactions. In response, MP Eros Biondini has proposed a bill to remove taxes on long-term Bitcoin holdings and promote self-custody rights.
AnaisA respected media report released Tuesday reveals a growing trend: more individuals are relying on generative AI chatbots, such as ChatGPT, to stay informed on daily news.
CatherineA South Korean court has cleared Haru Invest CEO Lee Hyung-soo of fraud, ruling that the platform’s collapse was due to mismanagement and external market shocks, not criminal intent. Although Lee and other executives avoid prison, they still face civil claims as investors suffered major losses from the company’s sudden shutdown in 2023.
WeatherlyMalaysia’s central bank has launched a Digital Asset Innovation Hub to support safe financial experimentation with digital currencies, including a ringgit-backed stablecoin. This move is part of broader reforms aimed at boosting innovation while ensuring economic stability and consumer protection.
WeatherlyThailand has approved a five-year income tax exemption on crypto trading profits from 2025 to 2029, applying to sales through licensed platforms. The move aims to spur blockchain innovation while maintaining investor protection through regulatory oversight.
CatherinePresident Trump has issued a third extension for TikTok’s US sale, confident China will eventually approve the deal. The move reflects TikTok’s rising political influence among young voters ahead of 2024. Yet with legal and trade issues unresolved, the outcome remains uncertain.
KikyoMeta has offered OpenAI engineers up to $100 million to join its new AI team, but none have accepted. OpenAI’s staff are staying due to belief in the company’s mission, despite Meta’s big pay offers.
WeatherlyArchetyp, the largest dark web drug market, was shut down after international raids, marking a major blow to online crime. Over five years, it processed $250 million in transactions using Monero. Authorities seized $7.8 million in drugs, hardware, and cryptocurrency.
Catherine