The Future of Centralized Exchanges: A Shift Towards DeFi, According to 1inch's Co-Founder

Centralized crypto exchanges may diminish over the next decade, evolving into frontends for decentralized finance (DeFi) aggregators, claims Sergej Kunz, co-founder of 1inch.

In a recent discussion with Cointelegraph at Token2049 in Singapore, Kunz suggested that these exchanges will gradually shift towards functioning as interfaces for decentralized exchanges (DEXs). “I think it will take like five to 10 years,” he stated.

He elaborated that while centralized platforms represent isolated markets, 1inch serves as a comprehensive liquidity hub. The announcement coincided with 1inch’s collaboration with prominent US crypto exchange Coinbase, integrating its service for DEX trading.

Kunz noted that investments by centralized exchanges into on-chain systems signal an awareness that their current technology “will not last forever due to the rise of decentralized exchanges and digitalized finance.”

“They don’t want to get left behind, so they adopt our technology, which, from our perspective, will strengthen the overall financial industry,” he remarked.

Sergej Kunz at Token2049. Source: Cointelegraph
Translation: Sergej Kunz at Token2049. Source: Cointelegraph

1inch’s Transformation to an Infrastructure Provider

The conversation followed 1inch’s announcement this week regarding its transition to a DeFi infrastructure provider aimed at supporting access for other enterprises. Through this change, 1inch intends to foster the use of non-custodial swaps among major centralized exchanges and wallets, including any mentions of Binance, Coinbase, Ledger, MetaMask, and Trust Wallet.

Kunz highlighted that the protocol has consolidated its offerings into a single API for developers, with the majority of its business now stemming from API integrations rather than direct user interfaces, a trend that has been consistent for approximately one year.

1inch’s Ongoing Expansion Efforts

In August, 1inch introduced intent-based cross-chain swaps to link Solana and Ethereum virtual machine networks, ensuring maximum extractable value protection. Earlier in June, the platform rolled out an update for its price route discovery algorithm, boasting improved swap rates by up to 6.5%.

Not long ago, 1inch also debuted a function allowing users to execute cross-chain swaps while keeping their assets self-custodied.

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