Cryptocurrencies

Coinbase and Binance remake the blow from the outage during the crash

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With the collapse of the crypto markets last Wednesday, many people wanted to withdraw some of their funds from the different platforms. With a huge volume of transactions to manage, several centralized exchanges saw their platform temporarily out of service. This was notably the case of Coinbase and Binance whose users have experienced connection problems. While centralized exchanges struggled to respond to strong withdrawal demand, DEXs were able to take over, posting record trading volumes.


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Intermittent downtimes that are starting to become a habit with Coinbase and Binance

When you use a centralized exchange to carry out a transaction, it acts as an intermediary. As a result, the transaction is not recorded on the blockchain, but rather in the wallets of the exchange that takes care of the custody of your cryptocurrencies. To satisfy these large volumes of exchanges, platforms such as Binance or Coinbase are therefore obliged to have several running servers available. However, these are exceeded in the event of extraordinary transaction flows. like the one that was observed after the collapse of the crypto market.


In front of this situation, Binance has paused withdrawals related to the most important assets while Coinbase reported intermittent downtime on their platform. These connectivity problems also encountered with other centralized exchanges such as Kraken and Gemini start to annoy users. We must recognize that these outages have become common currency in every period of market turmoil. These exchanges failing to meet their demand, so some have turned to DEX.

A more expensive alternative which is not without drawbacks

Unlike centralized exchanges, DEXs facilitate P2P exchanges and do not support custody of user assets. They are spared the previously mentioned breakdowns thanks to the use of smart contracts on a public blockchain. As this incorporates redundancies to avoid downtime, the DEXs can execute as many transactions as possible. This is what notably enabled SushiSwap to record a record volume of over $ 2.5 billion in transactions on the day of the crash.

Obviously, this unfailing availability leads to a high cost due to network congestion on the blockchain used by DEXs. This can also quickly become problematic when we know that most of them use Ethereum which already has to deal with this difficulty. Finally, the assets that can be traded by a client at a DEX are limited to those available on the blockchain they are using.

Before its IPO, Coinbase had promised in January to increase the capacity of its servers in order to better satisfy its customers. CEO of Web3 Pocket Network, Michael o’rourke Does not see the exchange honoring a promise that would force it to deploy servers that will have to meet unknown demand peaks.

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DISCLAIM

The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.

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