(The author of this article is James QU @PlatON, Tokyo)

Amid a global regulatory storm, CEXs have gradually lost users’ trust in them—what could be the reason? Perhaps the FTX incident is not the only trigger. Looking back at 2022, the crypto market was fighting against strong headwinds. There are many problems in the crypto ecosystem itself, and the biggest may be the contradiction between independent DeFi services and crypto-asset wealth distribution built on P2P decentralized technologies—for example, most crypto currencies are concentrated in the hands of a small number of related groups or individuals. Another reason may be that the young crypto ecosystem is prone to sudden failures, and even FTX, which was founded by people with backgrounds in Wall Street, was not spared—much like adding fuel to the fire.

From a user’s perspective, why are centralized exchanges like FTX so popular? Do users want to keep relying on centralized exchanges forever? No, because that runs counter to the Web3.0 trend and goes against the AI democratization that PlatON advocates. Modern society has already recognized the benefits of Web3.0 digital living—people are willing to manage their own data with dignity, including encrypted assets. However, reality is not always like that. “Following the people you trust” and “going with the crowd” are human nature. Users in the Web2.0 era are a prime example. Most of them go along with the flow; many times, because they lack deep understanding of things, they avoid verification and avoid checking what’s real versus what’s fake.

Even for Web3.0 users, in the face of such a powerful trend, their “fear of missing out” can still prevail. However, the more users join this trend, the greater the risk becomes—just like cars: the higher the load, the harder it is to stop. Even if people fully understand, their social behavior is strongly shaped by their innate nature. In many situations, people desire to follow and to form groups. Especially when faced with huge potential and risk, individuals are likely to lose confidence easily.

To avoid blindly following and blindly trusting, we do need user education. This can help more Web2.0 users transition to Web3.0, and empower more developers to build high-quality Web3.0 services. Web2.0-style users and developers are like cavalry from ancient times—they need to “choose the leader and serve accordingly.” In the crypto space, this means users and developers should choose advanced platforms: such platforms should not only have strong track records and healthy financials, as well as robust and stable management teams, but also stable, professional, and technically solid teams. It’s very dangerous to only look at whether an institution is superficially compliant, without paying attention to its governance capabilities.

Here, I’m not opposed to centralized exchanges; I’m suggesting that centralized exchange services should strongly introduce Web3.0 governance to ensure they have transparency, verifiability, and non-custodial (trust-minimized) characteristics. Recently, new trends have emerged in the crypto space, such as proof of reserves. In addition, we still can’t do without centralized services like cloud computing, nor without cloud services used for backup and recovery, and even for decentralized social recovery. Imagine if a user suddenly developed Alzheimer’s—would that imply another, even higher risk? There’s a joke like this: a severely ill father, right before his death, desperately wrote down a few strange words that seemed meaningless, but the children nearby didn’t understand, and therefore lost a very important key piece of information.

Remember, Web3.0 education is crucial. We don’t just need to educate users from the perspective of investor protection; we also need to empower developers and help them upgrade Web2.0 services into Web3.0 services. In this regard, PlatON is already prepared and is willing to contribute what it can.

This article appeared first in the post-bombshell era: user education is crucial; strongly introduce Web3.0 governance in CEXes, on Chain News ABMedia.