After OKX DEX suspended its services, who can catch this "huge number of users"?

Author: flowie, ChainCatcher

After OKX DEX suspended its services, on-chain players led by the P team began to urgently search for alternatives.

Some clever DEXs also started to pull out all the stops, trying to catch this "windfall," thus igniting a battle for traffic.

However, compared to the competition for traffic, this shutdown event may once again prompt exchanges and even all Crypto products to reflect on a more severe dilemma: how to smoothly transition under stricter compliance?

Why did OKX DEX suspend services?

Although OKX DEX claims that the service suspension is due to an upgrade, various clues in the market currently point to issues related to EU regulations.

Last week, Bloomberg reported that in the $1.5 billion theft case involving Bybit, hackers used OKX wallets during cross-chain transfers and money laundering, with amounts reaching $100 million, leading the EU to investigate OKX as part of the case.

Although OKX's CEO clearly responded on Twitter that Bloomberg's report stating "hackers laundered about $100 million in cryptocurrency through the OKX Web3 platform" is misleading and incorrect, and stated that OKX had frozen multiple accounts and provided technical support after the attack.

However, with the sudden suspension of DEX services today, many crypto KOLs pointed to the investigation by EU regulators as a possible reason.

AB Kuai.Dong also mentioned that after the suspension of OKX DEX, several exchanges were reportedly working overtime to rectify their operations, isolating exchange and wallet operations.

Competitors scramble, who can catch this "flood of users"?

OKX captured a large market share through its first-mover advantage and significant investment in manpower and resources. However, within hours of the DEX service suspension, it faced a scramble for traffic from competitors.

Binance was quick to act this time. Binance co-founder He Yi interacted in the comment sections of major KOLs, promoting Binance's wallet.

Binance's official Twitter also stated: "No time to explain, just update to the latest version of Binance, something big is happening," and then announced that there would be no fees for exchanges made within six months.

In the new version of Binance, assets in the Binance alpha section can be traded on the main Binance site, and the asset page also features an "alpha" sub-version.

Meanwhile, Bitget, which does not integrate wallets and exchanges, gained an advantage amid this regulatory storm. Bitget Wallet quickly responded by launching a one-week recharge incentive program with a prize pool of $90,000.

As a hot product in this meme cycle, GMGN, which has mainly attracted PC users in the past, also has a mobile version and has become one of the "alternatives" recommended by community users.

Additionally, compared to exchange wallets focusing on fee waivers or bonus incentives, Particle Network's chain abstraction trading product UniversalX may leverage KOL recommendations.

Many KOLs on Twitter are promoting UniversalX as an alternative to OKX DEX, with several providing detailed usage tutorials and the slogan "Use UX, can A8" gaining popularity.

However, based on some user feedback, many of these "alternatives" have significant "pain points" in product experience and substantial room for improvement.

For instance, Binance and UniversalX, which have been quite vocal today, have Twitter users reporting that while trading in Binance's alpha section was smooth, they lost $1,200; UniversalX has also faced multiple complaints about its trading not being smooth.

Compliance challenges, how should CEXs "transition"?

Mainstream exchanges like OKX and Binance have previously invested significant manpower and financial resources in compliance.

In just 2024, OKX's compliance team has added over 300 people, and by the end of 2024, the global compliance team is expected to approach 500 members. OKX also has a blockchain investigation team of over 150 people responsible for deploying anti-money laundering and sanction tools.

Binance has spent a considerable amount on compliance, with compliance expenditures exceeding $200 million by mid-2024, and the Binance compliance team is expected to have 700 members by the end of 2024.

Major exchanges are also vying for compliance licenses in various regions worldwide. However, OKX, which may be under investigation by the EU, is still one of only two exchanges to have obtained the EU's Markets in Crypto-Assets Regulation (MiCA) license (the other being Crypto.com), yet remains under regulatory scrutiny.

Due to the ongoing compliance issues faced by CEX operations, OKX has taken the lead in attempting to strategically position itself on-chain through wallets, prompting many exchanges to follow suit.

However, from the recent shutdown of OKX DEX, it appears that exchanges' main operations face challenges in achieving full compliance while maintaining decentralized operations on-chain.

For exchanges, the contradiction between the need for global expansion and regional regulatory compliance poses a real dilemma regarding how to achieve compliance in the future.

Exchanges or their founders are also seeking various ways to "transition."

After facing heavy regulatory pressure, Binance has recently chosen to embrace the UAE's sovereign wealth fund to establish a local protective umbrella to cope with compliance pressures.

U.S.-based exchanges like Coinbase, Kraken, and Gemini are seeking refuge through political donations while actively pursuing IPOs, with Kraken and Gemini recently reported to be preparing IPO plans.

Previously, Huobi founder Li Lin sold all his shares in Huobi to Hong Kong's Baiyu Capital after withdrawing Chinese users, making a complete exit.

However, the recent shutdown of OKX DEX not only serves as a warning bell for exchanges but also compels any Crypto product with centralized entities to consider potential regulatory pressures.