Crypto Exchanges And Their Governance Models

Governance models for crypto exchanges vary between “centralized” exchanges and “decentralized” exchanges, but also between individual CEXs and DEXs.

Crypto Exchanges 101

If you are involved in the cryptocurrency market, you should be aware of crypto exchanges, which are prominent platforms used to trade digital assets.

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However, not all crypto exchanges are created equal, especially when we talk about a centralized exchange (CEX), such as Binance, versus a Decentralized exchange (DEX), like PancakeSwap. The main difference between a CEX and a DEX is their governance model.

A CEX is controlled by an authority, like a company, while a DEX has a decentralized power structure. Additionally, there are hybrid (HEX) exchanges, such as Bitfloor and Poloniex, which share the characteristics of CEX and DEX.

Let’s explore:

CEXs are constructed similarly to traditional stock markets in that they are controlled by a centralized power structure. Their administrators make the essential decisions concerning their operations. Normally, these platforms rely on order books to manage the exchange of assets. They are also the most dominant types of exchanges in the crypto market. Some of the most popular are Binance, Coinbase, FTX, Huobi, and KuCoin.

DEXs, on the other hand, are designed for their users to influence core governance processes. Some exchanges use a voting system where users who hold a given number of native tokens are allowed to participate. DEXs appeal to a key tenet of the crypto mindset, decentralization of power, and their governance tends to be more democratic and dynamic than that of CEXs.

Of course, different CEXs have different governance models, just like DEXs.

Let’s look at some of the biggest crypto exchanges:

CEX: Binance

Binance is the world’s largest crypto exchange by volume, with a 24-hour trading volume of over $15 billion. A team of executives runs this centralized crypto exchange. The executive team is chaired by the co-founder and CEO of Binance Changpeng Zhao (CZ).

Executive management is responsible for all management roles necessary to run the business, including policy development and implementation. These top-down decisions are then communicated to users of the exchange through events, statements, press releases, and more.

CEX: upper bit

Upbit is a South Korean crypto exchange that was founded in 2017. The exchange is also a CEX, but it is governed differently from Binance in that Upbit is a subsidiary of South Korean fintech company Dunamu .

Dunamu has four subsidiaries, including Upbit, two investment exchange platforms and a stock management platform. Exchange is available in Korea, Indonesia, Thailand and Singapore.

The exchange has multiple CEOs, with each CEO managing their startup in a single country located. They then all respond to the direction of Dunamu, the parent company of the exchange. Only CEO Alex Kim manages the Singapore and Indonesia subsidiaries. These executive leaders share their roles as follows:

DEX: Pancake Swap

PancakeSwap is the dominant DEX on the BNB chain. This crypto exchange is community-based and allows any native CAKE token holder to participate in the governance process.

His governance process is quite simple: A CAKE HOLDER make a proposal. If the proposal obtains significant support from the community, then it becomes a basic proposal. The basic proposal is then voted on by the other CAKE holders and, if it passes, it is implemented.

DEX: Uniswap

Uniswap is a leading DEX on Ethereum, Polygon, and other chains. This platform also has a decentralized governance system driven by its native UNI token. It also has a simple and decentralized governance system. Here are the ground rules the platform released when UNI went live in September 2020.

  • A user must have at least 1% of the total UNI supply (delegate) to submit a governance proposal
  • Since tokens are used for voting, 4% of UNI’s total supply must be used to back a community proposal for it to be accepted.
  • There is a mandatory 7-day voting period
  • There is a blocking period of 2 days on the execution of the proposal.

Click on this link for more information on how to vote on Uniswap.

What is PancakeSwap:

PancakeSwap is a decentralized exchange (DEX) built on the BNB chain. It provides users with various features such as liquidity pools, exchange, yield farming, syrup pools, Automated Market MakerInitial Farm Offer (IFO), NFT profile system, and many more.

Additionally, the protocol helps users get the most out of their crypto assets by trading, earning through yield farming, and earning through lottery, prediction, and NFT collectibles. With the highest trading volumes in the market, PancakeSwap is the main DEX on the BNB chain.

Where to find PancakeSwap:

Website | Twitter | Medium | GitHub


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Crypto Exchanges And Their Governance Models

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