Although recent media coverage was saturated with stories about exchanges (in light of the FTX disaster), let's be reminded where the real innovations in crypto are: they exist way beyond the exchanges sector.
In fact, I will go as far as saying that maybe there were little financial or technological innovation in exchanges. Grossly seen, they just mimicked a part-bank / part-brokerage service, while doing poorly in aspects such as risk management and customer service among many of their weaknesses. Exchanges focused mostly on a single aspect of the blockchain: speed of settlement in the transfer of money. And that was done without even giving users direct ownership of their accounts.
Exchanges were a low-level proxy to the blockchain, and one could argue that, with the passage of time, perhaps in retrospect they could have been just a temporary bridge to on-boarding users who didn’t want the hassles of self-custody wallets.
In reality, there is nothing you can’t do with a self-custodial wallet on a Decentralized Exchange (DEX) when compared to what you can do on a Central Exchange (CEX). Actually, you can do a lot more on a DEX than you can on a CEX. And DEXes hold no risk caused by over-leveraged assets. Users get automatically liquidated when certain risk thresholds are reached. So, failures are micro-managed and never systemic.
True that some exchanges started offering additional financial services (e.g. staking, loans) and some NFT support, but all of these extras tended to follow the innovations on DEXes or elsewhere in the blockchain world. And still, no matter what exchanges offered, users didn’t hold ultimate ownership of their assets.
If you want to see real financial services innovation, go and check out the DeFi side of the market. Granted, DeFi has some issues it needs to solve, but as DeFi sorts out some of its shortcomings, mainstream adoption will accelerate.
When you take the long term view, it’s conceivable that one day we realize that exchanges didn’t really matter. They were a temporary passage towards a more comprehensive path : the decentralization of finance.
And when you add the advent of web3, the democratization of the current web will actually happen via web3 apps. There is a whole new generation of web/mobile apps that are being built right now that will include a good dose of decentralized finance.
The real future of crypto and the blockchain will arrive when it gets anchored with users, not speculators.