AI Puts Small Digital Asset Exchanges at Risk of Extinction

The digital asset exchange (DAX) industry is facing a new challenge: artificial intelligence (AI). Large DAXs like Coinbase are leveraging AI to cut costs and stay ahead, while small operators struggle to keep up.

Between 95% to 100% of Coinbase's code is now written with AI, performing the software development work of 1,200 employees. The company has also introduced AI-powered financial advisors that can provide personalized investment guidance and real-time portfolio analysis.

However, this shift towards AI has led to a wave of consolidation in the industry. Many small DAXs are struggling to compete with large incumbents, which have the resources to invest in AI technology.

The author notes that the 'hollowing out' of the crypto industry is not just due to market conditions, but also due to the uneven impact of AI on small DAXs. Without AI capabilities, these exchanges struggle to deliver required levels of efficiency and accuracy, making it difficult for them to stay afloat.