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Decentralized finance (DeFi) has recently gained immense global visibility, but centralized exchanges (CEX) still lead in trading volume and the trust of investors in trading their cryptocurrencies for both the intended utility model and security of funds. DeFi has a ton of promise, but there are always Kyle and/or discussions regarding speed of execution, liquidity to trade, and the security of funds on DeFi protocols. In the ever-changing crypto environment, stablecoins are quickly evolving beyond just being a digital version of dollars. The hybrid stablecoin model we have created with USD1 provides the opportunity to become a true bridge between traditional centralized exchanges and the DeFi utilities of the future.
This hybrid model provides an easy experience for investors needing liquidity access while also needing to earn a reward but still let the security of investing in crypto naturally develop. It’s obvious that crypto users are valuing efficiencies of combinations and added value from their digital assets now more than five years ago.
️🔥 INSIGHT: While DeFi gains attention, CEXs retain the edge with liquidity, execution, and security. USD1’s hybrid model adds loyalty rewards to stablecoin utility.
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— Cointelegraph (@Cointelegraph) October 7, 2025
Why Centralized Exchanges Still Hold the Upper Hand
Centralized exchanges have an advantage in that they provide better liquidity. Users can make very large orders while avoiding significant slippage which is typically a challenge for decentralized finance (DeFi). CEXs also offer better fund protection with insured wallets as well as multiple layers of authentication which can create trust in investors.
Another important factor is the speed of execution. Users can instantly buy or sell an asset which makes CEXs attractive especially to those that actively trade. Finally, CEXs can include more sophisticated analysis and trading capabilities that would enhance information that would help the user make a trade or investment decision.
The Rise of Hybrid Stablecoin Models
USD1 is a hybrid stablecoin that leverages the benefits of a centralized exchange, incorporating the benefits to actually earn yield in a DeFi fashion. Unlike traditional stablecoins that are mostly centered on holding value, USD1 provides users the ability to earn loyalty rewards, while also allowing the user to withdraw liquidity.
This appeals to both retail and institutional investors. Retail clients receive an expected return on their investments and loyalty, while institutional clients experience liquidity optimally over the world without the uncertainties of a decentralized platform. Combining all of these features makes USD1 a unique product in an active stablecoin space.
Loyalty Rewards and User Engagement
One key feature of USD1’s hybrid stablecoin model is its loyalty rewards program. Users earn incentives based on trading volume and holding periods, encouraging longer engagement and more frequent transactions.
In addition, these rewards help to build community. Investors feel appreciated for participating, which increases retention and leads to natural community growth. USD1 creates a unique environment that benefits investors and the community by tying rewards directly to stablecoin’s utility.
What This Means for the Crypto Market
USD1’s hybrid stablecoin model signals a fundamental shift in how users view digital assets. Stablecoins are no longer just passive holdings; they now can actively reward users and enhance utility. As hybrid models increase in popularity, centralized exchanges will probably adopt a hybrid type of model in order to attract and retain users–and it is this demand for safe, efficient, and rewarding cryptocurrency solutions that will connect innovations in DeFi with centralized trust.