Crypto exchanges, the frozen yogurt of Web3.
Remember when frozen yogurt stores were all the rage?
It seemed like there was one on every other block.
In summer, business was good! Frozen yogurt was the perfect treat: it was cold, tasty - and folks were happy to believe it was healthy.
But in the winter, heightened competition met with lowered demand, and things got tough.
By the time summer came back around, there were only a few surviving stores.
Something similar is happening with crypto exchanges right now.
It was just announced that Nasdaq-listed, Eqonex, will be closing down the crypto exchange part of their business.
They cited falling trading volume as a problem, as well as: “intense market competition, and low margins.”
In recent months, Blockchain.com announced a 25% workforce layoff, citing flat institutional revenue; and Coinbase let go of 18% of staff, after which it posted a $1 billion net loss in its Q2 earnings report.
But is this necessarily a bad thing?
On the surface - yeah.
Especially the ‘not enough trading volume’ part - lowered crypto trading indicates lowered interest.
But when you dig a little deeper, you realize Eqonex aren't getting out of the crypto business, they're just shifting focus.
They’re planning to instead push their custody and asset management business, Digivault.
Which aims to be an on-ramp into crypto, for big businesses (a wealthy and largely underserved market).
Which is kind of like a frozen yogurt store, turning into a members only dining club.
They're still in the food industry - they're just targeting a different niche of customers.
That's not cause for worry. That's smart.
