Seems you haven't followed years of discussions around fractional reserves schemes by CEX like Binance, OKX, Poloniex, HTX, Gate, MEXC and likely more.
Monero community started to suspect misconduct ...
I think it's mostly bullshit made by paranoid Monero people. Fractional reserves make sense when you have opinion about price (market maker, not exchange) or when you do loans. If you are running an exchange, it's the best way to go bust fast (see ftx).
Banks do it easily because they use it as leverage for loans, but with anything like Monero, it's fast lane to insolvency.
The explanation is much simpler. They are too lazy to run the nodes, most people don't give a shit about self custody, they want price casino and futures deliver that.
Note that even in futures, you need a counterparty that has an opposite opinion on the price. Exchange matches longs with shorts, their profit is fees. In order to balance long and shorts, you have a funding rate (which motivates market makers or anyone really to do carry trades - I was doing that before, now there are too many actors the rates are too low) or there's a slight difference between spot and future price which is a form of fee.
I love doing run on exchanges and I sympathized with Monerorun but I think Monero people saw something that was not there. Monero is too small for the exchanges to bother, it was 100x smaller than bitcoin, the squeeze risk was too high. I think most of the exchanges are operating for far too long to be gambling at this level of craziness and not go bust.
Occam's razor and Hanlon's razor are your friends. And of course self custody.
Banks do it easily because they use it as leverage for loans, but with anything like Monero, it's fast lane to insolvency.
The explanation is much simpler. They are too lazy to run the nodes, most people don't give a shit about self custody, they want price casino and futures deliver that.
Note that even in futures, you need a counterparty that has an opposite opinion on the price. Exchange matches longs with shorts, their profit is fees. In order to balance long and shorts, you have a funding rate (which motivates market makers or anyone really to do carry trades - I was doing that before, now there are too many actors the rates are too low) or there's a slight difference between spot and future price which is a form of fee.
I love doing run on exchanges and I sympathized with Monerorun but I think Monero people saw something that was not there. Monero is too small for the exchanges to bother, it was 100x smaller than bitcoin, the squeeze risk was too high. I think most of the exchanges are operating for far too long to be gambling at this level of craziness and not go bust.
Occam's razor and Hanlon's razor are your friends. And of course self custody.
