Router Pay in Action: Part 2 — CEX Withdrawals
In our previous article, we explored how Router Pay can revolutionize crypto payments by enabling merchants to accept payments seamlessly across chains. But Router Pay isn’t just about payments — it’s about simplifying complex crypto transactions for users everywhere.
In this edition of Router Pay in Action, we’re tackling another major challenge: moving funds from Centralized Exchanges (CEX) to Decentralized Finance (DeFi) without the usual friction of bridging and swapping. Our Scan to Pay feature makes this transition effortless, allowing users to withdraw from CEXs directly to the chain of their choice — without extra steps, extra fees, or extra headaches.
The Problem Statement
Despite the rise of decentralized finance, a large percentage of users still trade crypto on centralized exchanges (CEX) for various reasons, such as ease of use, liquidity, or specific asset availability. However, traders are constantly moving funds from CEX to DEX for several reasons:
- To trade tokens that are not listed on CEXs (as listings on CEXs take more time compared to the near-instant token availability on DEXs)
- To use other protocols beyond trading, such as staking, providing liquidity, or lending and borrowing protocols.
The problem arises when users try to withdraw their assets from CEXs. Asset withdrawals are often limited to specific chains depending on the exchange. Moreover, not all assets are available for withdrawal on the same chain, and many users want to withdraw their assets to new chains that the CEX may not yet support.
For example, users may face difficulties when withdrawing assets to newer or unsupported chains. To resolve this, they typically need to perform additional steps like bridging or swapping — sometimes both — to continue their actions on-chain.
Current CEXs Withdrawal Flow
Consider the case where a user wants to transfer USDC from a CEX (such as MEXC, Binance, or KuCoin) to use a new chain, say Abstract chain. MEXC, KuCoin, or Binance may support USDC withdrawals but not directly to Abstract; therefore, users need to:
- Withdraw USDC from their CEX account on a popular chain like Arbitrum, BNB Chain, Polygon, among others. In this step, the user will incur withdrawal fees.
- Bridge USDC to the Abstract chain and incur the bridging fees.
This process involves multiple manual steps and is often time-consuming and costly, which can deter users from participating in DEX activities.
Router Pay’s Solution
Router Pay offers a streamlined solution to this problem. For the scenario mentioned above, the user can easily transfer assets from CEX to DEX without the need for manual bridging or token swaps. Here’s how it works:
- Generate a Router Pay instruction-specific address (ISA) on Router Nitro with the following details:
- Source Token: USDC
- Source Chain: Arbitrum/Polygon (or any other chain supported for withdrawal by the CEX)
- Destination Chain: Abstract
- Recipient Address: User’s wallet address
2. Withdraw to the ISA on the selected source chain.
Once the user withdraws to the ISA address on the selected source chain, the transaction is completed and bridged automatically by Router Pay. The user no longer needs to manually swap or bridge assets themselves, which simplifies the process and reduces cost & friction when moving between chains.
What’s next? Soon, we’ll have a dedicated CEX withdrawals page on Nitro that will make it even more intuitive to withdraw funds from CEX. Stay tuned for more updates!
