In 2019, Phemex launched with four trading pairs and a lean team of builders. At the time, centralized exchanges were still in their formative phase, with limited competition and relatively simple offerings.
Today, Phemex serves users in over 200 countries. The company works in an environment where regulations are changing, user expectations are shifting, and on-chain complexity is growing. Exchanges like Phemex have to deal with this level of challenges, which introduce both technical problems and questions of long-term relevance.
To understand how Phemex is handling this change, BeInCrypto spoke with Federico Variola, the company’s CEO since 2021, in a recent Horizon Series episode. In this discussion, Variola also talked about how decentralization and product design are coming together to redefine what centralized platforms are and what they should become.
What Did It Look Like Before Centralized Exchanges Entered Their Super App Era
Our conversation with Variola started with his throwback to 2019, a time when launching a centralized exchange was significantly more straightforward than it is today. Back then, Phemex entered the scene with just four trading pairs, mirroring a market still in its infancy. The competition was still limited at the time. Bybit, for example, only offered three perpetual pairs, and the infrastructure requirements to launch were minimal.
“We were able to get things set up very quickly, just a few months. The exchange was up and running. And we were very lucky, because basically we launched in 2019. Then there was the COVID crash, so the market seemed desperate. But we were able, by launching slightly before the crash, to catch the whole bull market. I think we launched with very good timing, let’s say,” he remembered.
But then, Variola pointed out how things are different now. Centralized exchanges have now quietly become some of the most complex financial platforms available. He sees this phenomenon as a direct consequence of centralized exchanges trying to keep pace with the crypto industry’s relentless expansion.
“If you compare the number of products that any centralized exchange like Binance, Bybit, or Phemex offers to what you see in a typical banking app, you’d be shocked. There’s so much happening inside a crypto exchange compared to more established apps like Revolut, eToro, or Robinhood.”
Now That Decentralization Grew Up, Where Does That Leave Centralized Exchanges?
Despite the significant progress, they now face mounting competition from their decentralized counterparts. In his view, the limitations that once made decentralized exchanges impractical have largely been resolved. Infrastructure has improved, Layer 2 solutions are live, and Ethereum’s development roadmap has matured. The technical barriers that previously held decentralized finance back are no longer as relevant.
This shift has created a new kind of pressure. The best assets no longer make their first appearance on centralized platforms. They are born on-chain.
“You don’t want to buy a token when it gets listed on Binance, that’s already a bit too late. I think right now, we’re at a point where centralized exchanges are starting to become more decentralized. Thinking about that trajectory helps make sense of where the industry is going.”
BeInCrypto then asked Variola for his perspective on decentralization, both in principle and in practice. To him, decentralization serves as a safeguard. It builds trust by removing single points of failure. He pointed to Bitcoin and Ethereum as examples.
“Blockchains such as Bitcoin and Ethereum carry the burden of keeping decentralization as a core tenet of their project.”
Still, he doesn’t see decentralization as a one-size-fits-all requirement. Networks like Solana and Hyperliquid have started with more centralized designs and have still found product-market fit. What matters, in his view, is that some projects are willing to take on the responsibility of preserving decentralization where it counts.
“I think the whole industry should support these projects because they take some of the core crypto tenets very much at heart. I think we should do that as an industry.”
How Phemex Is Turning Variola’s Hybrid Vision into a Real Product Strategy
Variola’s perspective on decentralization is evident in how Phemex is already acting. Rather than compete with that trend, Phemex is adapting its model by integrating on-chain access directly into its interface. Users can already buy tokens through the platform without needing Phemex to list them.
“Right now, we already have some kind of product that allows users to trade tokens directly on-chain. So we don’t need to list tokens anymore as an exchange. We just let people buy them, and then we do the transaction for them on-chain,” he added.
According to Variola, this direction reflects a broader change in how centralized exchanges define their role. As on-chain volume continues to grow, CEXs are becoming less like siloed marketplaces and more like brokers for on-chain activity.
“You don’t want to manage a wallet for Solana, one for Ethereum, one for Avalanche. You want a place where you can buy all the tokens without much of a hassle. I think centralized exchanges will continue doing that.”
At the same time, Phemex is preparing for a more regulated future. Variola noted that the exchange is closely watching developments like MiCA in the European Union and the potential for expanded perpetuals trading in the United States.
“We’ve seen Coinbase announcing that, so I think that would be the next step for our industry—finally allowing these markets to be onboarded into the on-chain economy.”