With the complete bankruptcy of Alameda Research and FTX, Sam's huge crypto empire collapsed in just one week. This event was like a splash of cold water on the entire crypto market, the market capitalization has plummeted from 1000 billion dollars to 870 billion dollars after this incident. Immediately, the top exchanges in the market such as Binance, OKX, ... announced their reserve statements. How transparent is the transparency of these centralized exchanges? What should investors pay attention to after the FTX event? Let's find out with Holdstation through this analysis!
List of exchanges that announced reserve address.
Looking at the overall picture, the top 10 largest exchanges have been publishing reserve asset statements to prove their financial health to investors. In which, 5 exchanges are: Binance, OKX, Crypto.com, Kucoin and Bitfinex that are partners with Nansen have published their asset reserve declaration. Other exchanges are in the process of doing this.
List details here
However, will the publication of this statement prove the financial health of the exchange to investors? We need to have a closer look at the reserve assets of these exchanges in the observation of the reserve assets of the exchanges below.
Details of the collateral of exchanges
With exchanges that have published their reserve assets, Binance is currently at the top with total reserves currently reaching $63.8 billion. Followed by Bitfinex, OKX, Huobi, KuCoin, Crypto.com and Deribit.
The types of reserve assets of the allocated assets vary widely. However, if we look at the analysis, we can see that Binance's financial health is at its best when the majority of Binance's reserve assets are stable coins, accounting for 57%. Although BNB is a token of Binance, the contribution in the collateral is only about 9%. Next is OKX with the amount of collateral being stable coins accounting for 53%, most of the remaining collateral is BTC, ETH and there are no OKB tokens even though this is OKX's token.
Two big lessons:
— CZ 🔶 Binance (@cz_binance) November 8, 2022
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don't use capital "efficiently". Have a large reserve.
Binance has never used BNB for collateral, and we have never taken on debt.
Stay #SAFU.🙏
In the opposite direction, Crypto.com, Huobi and Bitfinex are in a worrying situation when the reserve assets of these 3 exchanges are accounting for most of the exchange's own tokens and other tokens. This is really bad when the value of electronic assets is extremely volatile, which means that the total value of the reserve assets of the 3 exchanges will also be extremely volatile. CZ, CEO of Binance also warned that when project exchanges use their own tokens as collateral, the use of their own tokens as collateral also pose almost the same risks.
The asset reserve report from Crypto.Com also shows that they hold more than half of the other 40% of reserve tokens are SHIB tokens. It is extremely dangerous to leave meme coins as a reserve asset when the volatility of meme coins is extremely large.
Personal view of the upcoming market
FTX's event will most likely spark the Domino collapse of a host of other companies as well. Investors should manage assets and wait patiently for opportunities. This crash will be a test for all tokens, if any token survives these periods, the next uptrend season will be a worthy investment choice. Typically, tokens of exchanges, such as BNB, BNB have had a very good holding period even during the recent market crash.
Through this event, we also see that the influence of CZ on the market is extremely large, investors should stick to the projects that Binance Labs invests and targets, typically the recent trend of wallets being CZ shill also flew very powerfully.
In terms of trading trends, cex exchanges have shown relatively many limitations such as the temporary suspension of deposits and withdrawals, the opacity of the declaration of reserve assets, and lessons learned. Then the trend of switching to delivery on dex exchanges will be more and more. Investors can also pay attention to this and redefine their investment cash flow towards more defi products.