Decentralized exchanges could gain popularity following the FTX collapse

Ethan Buchman of Cosmos believes that 2023 may be the year of decentralized exchanges and more advanced cross-chain applications.

Welcome to Forkast Forecasts 2023. In this series, leaders, innovators and visionaries in blockchains share their industry predictions for the year ahead.

Ethan Buchman

Ethan Buchman is the cofounder of blockchain protocol Tendermint and decentralized network Cosmos. He is the chief executive officer of Informal Systems, a company focused on verifiable distributed systems and organizations, including formal verification of Cosmos protocols and their implementation. He serves as the vice president of the Interchain Foundation, a non-profit dedicated to the research and development of open decentralized networks, such as the Cosmos Network.

Buchman also runs a blockchain-focused consulting and educational platform based in Canada CoinCulture and education provider CryptoConsulting.

Predictions for 2023

Decentralized exchanges will gain prominence following FTX’s collapse

“[The FTX collapse] further proves the thesis of the builders, that we need decentralized, trustless, verifiable solutions, and that these unaccountable, untransparent centralized exchanges where it’s apparently so easy to commit fraud, mingle users funds and abuse their trust, to some extent, need to come to an end. We need to use these decentralized, verifiable solutions more.”

DeFi will become more integrated with real-world payment systems

“There are some foundational DeFi (decentralized finance) protocols that are really working. And it seems like there’s an opportunity to build on that and on integrations supporting real-world commerce. We’re pushing for a particular approach that we call collaborative finance, rather than decentralized finance that taps into the real-world payment system, supporting real-world networks of obligations and the trade credit economy that can help small to medium-sized businesses with their liquidity needs and realize the potential of blockchain technology as a payment solution, and not just the vehicle for all this speculation.”

Advanced cross-chain applications will launch on IBC

“[The Inter-Blockchain Communication protocol] IBC is a general-purpose communication protocol. Token bridging is just one application on IBC, but we’re starting to see other applications launch and be adopted. Those include ways to share security over the Interchain and the security of one blockchain can be used on another, or to have more advanced control from one blockchain to another. So one blockchain can control an account on another…We’ll see the growth of more advanced applications over IBC in 2023 and people might start to understand that this is more than just token bridging, this is general-purpose cross-chain communication.”