How to Ensure the Security of the Exchange in Cold Crypto Winter?

TL: DR

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- In the domino effect caused by the FTX crash, the majority of retail investors got affected the most;

- The influence of cryptocurrencies led by BTC on the global market may be weakening;

- In the absence of rules, the ability of financial institutions to remain non-transparent will be improved;

- It is the foundation of crypto exchanges to be able to quickly fulfill 100% of users' capital needs at any time.



Introduction

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In the past week, there has been a huge earthquake in the crypto market.

In the domino effect caused by the FTX crash, the majority of retail investors got affected the most. However, in response to the current market situation with high volatility, it is suggested that HODL should be the best choice. Especially for non-professional traders who cannot manage risks, it may be one of the best choices to spend this cold winter steadily. After all, as time goes by, all this will disappear.


How Long Will the FTX Effect Last

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Uncertainty in the crypto market will continue to loom.

The sudden collapse of FTX has destroyed the relationship between cryptocurrency and other financial assets, which means that cryptocurrency led by BTC may be weakening its influence on the global market. Data shows that BTC fell 23% last week, the largest monthly drop since last June.

Meanwhile, the S&P 500 index rose 5.9%. The study points out that the correlation between the two has dropped to the lowest level since this year. In addition, the performance gap between BTC and NASDAQ has reached the largest level since 2020.

Under the influence of the FTX crisis, cryptocurrency may no longer be able to be included in the mainstream portfolio.

Many fund managers now believe that the reason for using cryptocurrency as a portfolio diversification tool or digital gold has been overturned, because "the loss is too large and the market structure risk is too high".

Chris Weston, research director of Pepperstone Group, said: "The idea of using cryptocurrency as a high-risk investment tool is fading, because there is a simpler way to invest cryptocurrency in other places without suffering the same systemic risk."


What Are the Hidden Dangers of the Exchange

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Because of the FTX crash effect, users once again realized some inherent defects of centralized finance (CeFi). For example, there are some excessive incentive risks, which make financial institutions spontaneously overestimate the value of assets and underestimate the value of liabilities.

Secondly, there is a lack of timely and effective supervision. As we all know, regulation always lags behind, which is something we must be aware of. Generally, we need to wait for events to happen before regulation arrives.

But the most important thing that users are most concerned about is the lack of transparency to ensure the safety of their own assets. Generally speaking, in the absence of rules, the ability of financial institutions to remain opaque will be improved.

Therefore, users should be vigilant to transfer a large number of cryptocurrency exchanges before or after they display their wallet addresses, and to those exchanges that provide incentives such as zero transaction fees but do not have a healthy 100% reserve.


How to Ensure Asset Security

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Asset security is the most vital interest of users. The reason why the centralized trading platform is recognized and welcomed by more people is that it has long-formed user habits, high asset security, convenient operation with low delay, and high efficiency in trading.

Since the establishment of Gate.io in 2013, capital security and user data security have been the top considerations of the platform. Gate.io adopts a self-developed digital asset trading system, each module iterates independently, and protects every transaction of users through professional company penetration testing and annual security audit.

All website data of Gate.io is transmitted through encrypted Transport Layer Security (TLS) connection (HTTPS). And use a Web Application Firewall (WAF) to deal with illegal intrusion, data tampering, and vulnerabilities. When threats are found, the firewall will automatically open.

The front end of the system uses Cloudflare Firewall Enterprise Version to detect malicious traffic and attacks, and Anti-malware through CAPTCHA. For DDoS countermeasures, Gate.io continuously improves the anti-DDOS attack mechanism to achieve self-evolution of the platform through four steps of detection, response, rout and record.

In particular, Gate.io's reserve assets have passed the Armanino audit twice in a row and can provide 100% margin for users. Users can view the results on the Armanino official website.

For users, the Proof of Margin means that Gate.io can provide 7x24 hours of stable fund guarantee, and can quickly fulfill users' fund needs at any time. Users can verify whether their assets are included in the audit on the official Armanino page, or download and view the margin audit report.

Gate.io is always developing towards higher transparency and security, improving the security of user assets and enhancing the confidence of the market. Cooperation with a trusted third-party audit company is only a small part of the development process of higher transparency and security. Gate.io will continue to maintain a safe, fair and transparent trading environment and help the healthy and stable development of the digital asset market.



Conclusion

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As an established exchange with a stable operation for 9 years, it has always been the protector of user asset security. We hope to be the pioneer in helping CeFi become a commonly used trading standard in the world.

This FTX event is cruel to the crypto market, but it also released a large number of potential risks in the crypto market, and further prompted us to play a more significant advantage in crypto finance.

The intriguing thing about the future is that no one knows what it will be like before it really comes.

Therefore, we don't need to worry too much. We should focus on clearing things at hand, ensuring the safety of our assets, learning to settle in a bear market, and keeping an eye on real life in our spare time. Perhaps this is the way to win in the crypto world.



Author: Gate.io Researcher Byron B. Translator: Joy Z.
This article represents only the researcher's views and does not constitute any investment advice.
Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.
In all other cases, legal action will be taken due to copyright infringement.