Marc Röckener

• The thesis, titled "Centralized Exchanges Incorporating Decentralized Features: Factors Driving Implementation and Impact on the Competitive Landscape", explores the transformation of centralized cryptocurrency exchanges (CEXs) as they integrate decentralized features, reshaping the dynamics of the cryptocurrency industry. In the evolving landscape of digital finance, the roles of CEXs and Decentralized Exchanges (DEXs) have become increasingly prominent in the area of digital asset trading. CEXs, recognized for their user-friendly interfaces and robust infrastructures, confront the challenges posed by asset centralization, often acting as both asset repositories and potential single points of failure. In contrast, DEXs offer transparent, peer-to-peer transactions, yet they grapple with issues of liquidity, functional limitations, and susceptibility to scams. In response, some CEXs are strategically adopting decentralized features, giving rise to Centralized Decentralized Exchanges (CeDeXs) or Hybrid Exchanges (HEXs), to synergistically combine the advantages of centralized and decentralized systems. Additionally, some centralized cryptocurrency exchanges are constantly expanding their structures and services and are therefore increasingly developing into multifunctional crypto service platforms. As a result, providers are also incorporating more and more protocols, i.e. financial applications from the decentralized finance (DeFi) area, so that the boundary between CeDeXs or HEXs and CeDeFi providers is becoming blurred. These developments give reason to examine the status quo regarding the decentralized features introduced in CEXs, to explore the incentives that motivate centralized players to integrate these features, and to explain the effects on the economic position of companies. In order to examine the areas of investigation mentioned in a differentiated and explicit manner as the main goal of this thesis, the following specific research questions serve as fixed points for this thesis: 1.What are the key decentralized features currently being implemented by centralized exchanges? 2.What factors drive centralized exchanges to adopt decentralized features? 3.How does the integration of decentralized features in centralized exchanges impact their market share and competitive position? The research design chosen for this study is the ‘Explanatory Sequential Design’, a mixed methods approach that incorporates both quantitative and qualitative research methods. According to the Harvard Catalyst approach, the research begins with quantitative data collection and analysis, followed by qualitative data collection and analysis, leading to interpretation of all data and information obtained By employing an explanatory design, this research seeks to combine the strengths of both quantitative and qualitative research methods, thereby enriching and broadening the understanding of the study's subject. The approach, in its integrated form, ensures a comprehensive and nuanced grasp of the research topics. The chapter titled 'Market and Literature Analysis', mirrors the 'Quantitative Data Collection and Analysis' section, involving the scrutiny of various sources including standard literary works, industry reports, company statements, annual reports, whitepapers, public announcements, and blockchain data. Following the Explanatory Sequential Design framework, this quantitative content undergoes systematic categorization and quantification, facilitating the identification of patterns, themes, and relation-ships. At the end of the analysis of each research question, whether in the course of quantitative or qualitative analysis, the results are clearly visualized. In this way, the results can be quickly understood and studied in more detail in the running text. Complementing this, the 'Qualitative Data Collection and Analysis' involves interviews with 12 experts, aimed at validating, refuting, or expanding upon the findings from the market and literature analysis. The unique perspectives and experiences of these experts, garnered from their operational forefront experiences, are invaluable. These interviews are meticulously analyzed in relation to the three research questions, comparing and contrasting expert opinions to discern similarities and differences. The synergy of these two research methodologies yields answers that are grounded in both broad (quantitative) and deep (qualitative) data. In the concluding part, the thesis synthesizes results from both methods, highlighting consistent, contradictory, and supplementary findings. This synthesis culminates in identifying the three most significant decentralized features in centralized crypto platforms and the three primary drivers for their adoption by centralized entities. The mixed methods research design proves particularly valuable in exploring the impact of decentralized features on market share and competitive positioning, offering expert insights deeper than mere figures and reports. Finally, the thesis concludes with a forward-looking perspective, which is the secondary goal of the thesis, drawing upon scholarly research and expert insights. This outlook delves into future trends in the CeDeX/CeDeFi sector and their potential implications for the wider financial landscape, providing a comprehensive and thought-provoking end to the study.