The crypto asset industry is changing the global financial markets. Cryptocurrency exchanges allow users to trade one crypto for another, buy or sell coins, and exchange fiat currency into crypto. As constant revenue-generating products of the crypto ecosystem, the top crypto exchanges deliver million-dollar profits daily to owners, according to Bloomberg.
Based on 24-hour volume on January 4, 2021, the top crypto exchanges worldwide include Binance, EtherFlyer, Binance KR, Huobi Global, and HBTC, according to Statista. Binance revealed to Bloomberg that it expects profits of between $800 million and $1 billion for 2020, up from $570 million in 2019. The market's uncertainty, which pushed traders into digital currency, caused the growth in earnings.
Owning a crypto exchange is the best way to get involved in the cryptocurrency industry. An exchange platform offers the highest gains touchpoint while allowing insulation from market volatility. Every exchange sets the price based on trading volume and the demand and supply of the users. The market sets the price for crypto. With sufficient start-up capital and a cryptocurrency exchange script in place, you'll break even within a short period. Read on to find out about the most popular 5 revenue streams of cryptocurrency exchange platforms.
Commission Trading Fees
Charging commission trading fees is one of the most mainstream ways in which exchanges generate revenue. Fees can vary from 0.1 percent up to 3 percent, depending on the platform. When setting the commission trading fees on your cryptocurrency exchange script, consider the total volume of trading performed.
Binance handles trading volumes totaling around $2.8 billion per day, according to the company's 2019 annual report. The platform's trading fee is 0.1 percent, which you can reduce by using the BNB (Binance Coin) token. Other platforms such as Huobi, Bithumb, or Bitfinex process between $600 million and up to $1.4 billion daily and charge trading commissions of about 0.3 percent.
Initial Coin Offering Fees
During the early stages, new exchanges struggle with low trading volume. To drive revenues, exchanges organize Initial Coin Offerings (ICO) and Initial Exchange Offerings (IEO) and collect a part of the funds these offerings raised. Fundera shows that ICOs raised around $11.4 billion in 2020, including ongoing and completed ICOs.
In 2020, the average ICO raised around $11.52 million, down from 2019's figure of $24.35 million. Fundera reveals that over the past five years, ICOs have raised $22.5 billion. According to Coinist.io, Filecoin, which raised $257,000,000 with its ICO, remains the most successful to date, with 51,400 tokens sold.
Initial Exchange Offering Fees
ICO trends are shifting to IEO, where owners use crypto exchange platforms to launch their projects. IEOs deliver benefits to both exchange platform owners and project owners. Exchange owners earn revenue from listing fees and project owners capitalize on the existing users of the exchange.
IEO listing fees vary depending on the size of the cryptocurrency exchange platform. Smaller exchanges apply listing fees ranging between 1 Bitcoin (BTC) and 5 BTC. Medium-sized platforms charge between 10 BTC and 50 BTC for every listing. Top-tier exchange platforms charge between $1 million and 2.5 million per listing. Cryptocurrency exchange script owners can set their own listing fees depending on the number of users and trading volume.
Liquidity creation for a coin or market making is a strong revenue stream for cryptocurrency exchange platforms. Market making involves buying and selling cryptocurrencies on the exchange at prices, which are slightly higher than on other platforms. When the trade happens on the platform, you swap the trade on a different exchange to offset your previous trade and the profit difference the exchange makes.
Automated market-making delivers exceptional results in long-distance markets, including the difference between the price of the bid and the bid. The owner of a cryptocurrency exchange script can dictate the platform's prices and take advantageous positions. You can also create markets for cryptos you trust or which need liquidity.
Strengthen your users' engagement and loyalty rates with loyalty tokens. You'll drive value towards your platform and keep users in your infrastructure. Loyalty tokens allow crypto exchange owners to offer a parallel and advantageous fee structure to their clients. For example, Binance released the Binance Coin, which allows traders to pay transactions fees with BNB and receive a 50 percent discount on commissions.
With a high-performance cryptocurrency exchange script, you can assign a coin as your loyalty token. Your exchange will promote that cryptocurrency through discounted trading fees to clients who use this structure. The loyalty token keeps customers engaged with your platform by delivering a variety of incentives.
The crypto brokerage landscape is rapidly shifting. Crypto enthusiasts can enjoy strong revenue streams by launching their own cryptocurrency exchange script. The top crypto exchanges are raking in millions of dollars per day in profits. Exchanges are the best way to step into the crypto scene and start making money in a short period. With enough investment capital and the best software, you'll see real profits within months.
Cryptocurrency exchange software platforms deliver 5 major revenue streams. Owners can charge trading commissions for operations performed on the platform. You can set different ICO and IEO fees and collect funds. And exchanges can become market makers and launch loyalty tokens to engage their users and expand their customer base.