How Booming Exchanges are Prepping for a Bear Market

Now is the time for crypto companies to focus on the infrastructure and services that will be essential in supporting the next bull run, said Brian Hoffman, Kraken’s crypto platform lead.

article-image

BRIAN HOFFMAN, PLATFORM LEAD, KRAKEN

share

key takeaways

  • Bitcoin’s record run in 2020, which extended into 2021, sent exchanges’ volumes and revenue soaring
  • Coinbase revamped prime brokerage while Kraken is rolling out parachain auctions

Crypto may be in the midst of a significant selloff, but for exchanges, this is the time to innovate. 

“There’s going to be a bear market at some point, and everything will be down, people will be less interested in volume,” said Brian Hoffman, Kraken’s crypto platform lead. 

“And that’s the time where you’re really building the foundation for the next cycle.” 

Bitcoin’s record run in 2020, which extended into 2021, sent exchanges’ volumes and revenue soaring. During the first quarter, crypto exchange Kraken processed more than $160 billion in trading volume, 58% more than its volume for all of 2020.

“Kraken is obviously doing really well in this market, I think everybody is,” said Hoffman. “As the saying goes, even a baked potato could make money in this market. It’s not that hard.” 

Coinbase reported record Q1 earnings earlier this month, but warned investors that a dip in crypto prices may lead to disappointing numbers going forward. 

“We seek to operate the company at roughly break even in terms of profitability, smoothed out over time, for the time being,” Coinbase said in its shareholder letter at the time of the earnings release. 

The company has since announced a revamp of its prime brokerage service, Coinbase Prime, in order to better serve institutional clients. 

Right now is the time for crypto companies to focus on the infrastructure and services that will be essential in supporting the next bull run, Hoffman said. 

“It’s a lot of infrastructure work, it’s a lot of building relationships with the projects and building those services so that when they come back around, we can scale ourselves,” he said. 

Kraken is also looking to expand services and will soon offer clients parachain slot auction services. 

Parachain slot auctions, or parachain auctions for short, allow developers to use cryptocurrencies Polkadot and Kusama to create new digital assets and decentralized applications (dapps) on top of the blockchain. Polkadot and Kusama are designed around the Parachain and Relay Chain blockchains. 

“There is this problem of scalability as the blockchains become popular,” said Hoffman. “What kind of technology are we going to build to allow everybody in the world to use it rather than just a couple thousand people?”   

The networks use parachain auctions to fairly determine which blockchains get to leverage the Kusama or Polkadot relay chains. 

Kraken has been working on this project over the past several years. It has already launched its very first parachain in a testing stage and will activate the options once developers are confident in the security.  

To Hoffman, the project is the next natural step for Kraken as blockchain technology continues to grow. 

“Our vision of where this is all going is that it’s just going to be a multi-chain world. And so Polkadot is just one example of several, for example Binance just launched their smart chain, which is their scalability solution and their community. There’s Mina coming out, Solana, which is closely related to FTX and their platform, they’re all doing their own scalability” 

Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Curve's Stablecoin and Lending Market

Research

AMMs are at the root of everything elegant and useful in DeFi.That's why Curve put LLAMMA at the center of its lending protocol.

/

article-image

Given the impressive growth trajectory and unpredictable future of crypto markets, the potential systemic risks cannot be dismissed, the board said

article-image

Five years after the ICO boom and bust, the notion of traditional finance assets existing on the blockchain is not nearly as far fetched

article-image

The Fahrenheit Consortium beat out competing offers from Novawulf and BRIC

article-image

A research paper modeled the reliability and carbon footprint of crypto mining in Texas

article-image

Bring in the next million developers, and then we can start worrying about where to find the next billion users

article-image

Sponsored

Web3 real estate investing platform Parcl leverages blockchain to address the current bottlenecks facing property investing