Analyzing the business model of Crypto Exchange Platforms

There is a viable substitute to traditional financial assets now. As the global economy goes into turmoil, investors are putting in more money on digital currencies. Likewise, there are several platforms like Binance, Coinbase, Bitfinex, Huobi, FTX, Kraken, KuCoin, etc that enable round-the-clock trading of assets. Are you an entrepreneur who is interested in beginning a virtual financial revolution? Know how crypto trading platforms make money. 

Trading charges – Users pay a certain commission when they initiate buy and sell orders on a cryptocurrency exchange. Generally, this varies based on aspects like the size of the trade and the time they take to fill the order, the location of the investors, the type of platform (Centralized, Decentralized, and Peer-to-Peer), and the payment method utilized. 

Listing fees – The 24-hour trading volume of Binance and Coinbase is $17.44 billion and $3.64 billion respectively. Moreover, these platforms have listed around 405 and 159 coins respectively. Likewise, these crypto exchanges impose a certain fee when digital assets get listed on the platform. These charges depend on factors such as the background of the issuer, their market capitalization, and financial statements over a period.

Deposit charges –  You can impose a deposit fee when users transfer their fiat currencies like US Dollars (USD) and Euros (EUR) to the crypto exchange. Generally, there is a minimum limit when investors make deposits. Generally, no charges are levied for crypto and stablecoin deposits. Extra fees are applicable when investors use payment options like credit cards, debit cards, and wire transfers. 

Withdrawal fees – Investors need to pay a specific amount while withdrawing funds from the cryptocurrency exchange. You can attract crypto holders by not imposing fees when they transfer funds from one wallet address to another.  Importantly, extra charges are imposed when users withdraw fiat currencies by using payment methods like debit cards, credit cards, and wire transfers. 

Fees for initiating Over-The-Counter (OTC) trading – Unquestionably, investors can pocket hefty returns by doing Over-the-Counter (OTC) trading on a cryptocurrency exchange. Sometimes, they can get a good profit by completing trades within a specific period. Thus, both crypto buyers and sellers will incur a certain fee after executing the trade. 

Importantly, there is a limit related to the price spread. This will be above or below the market price and users have to process the payment from their software wallets. They have to enter details like the price in crypto, the price in fiat currency, and tap the request trade option. Subsequently, their trade gets completed depending on the order size. 

Maker Fees – Users incur a certain charge when they add liquidity to the order book. Further, this happens when they place a limit order below a certain price. Later, investors pay a maker fee after executing the order. Generally, the fees may increase when it takes time to match a buy with a sell order.

Taker charges – This is applicable when investors remove liquidity from the order book. They must place a counter order against an order already requested by another user. Subsequently, the matching engine executes the market order after the user pays the taker fees.  

What is the primary difference between maker fees and taker fees? Users pay the taker fee when they place the hidden order on a cryptocurrency exchange. However, they should pay a maker fee. This happens when the limit order and the hidden order matches.

Margin Funding charges – Users can earn high returns by taking short or long positions on their assets. They have freedom in choosing the trading pair and the leverage (5x, 10x, and 20x). Eventually, crypto investors receive benefits like 24×7 portfolio management, sufficient liquidity, protection against extreme fluctuations, and insurance. 

Moreover, users can choose options like Cross Margin and Isolated Margin. The fees vary based on factors like the fluctuations in trading pairs, the ups and down in cryptocurrencies, DeFi tokens, and stablecoins, and the total assets locked by investors in their accounts. Importantly, details about the opening and closing positions, status (normal and executed), and amount of profits are mentioned. This ensures transparency. 

Derivative trading fees – Investors can pocket more wealth by choosing options like Futures Contracts, Options, Perpetual, and Leveraged Tokens. They can initiate this after seeing data about the index, countdown, the fluctuations in trading volume, and the extent of order depth. The charges differ for makers and takers. 

Further, makers get a rebate after their limit or market order gets executed. Generally, this happens after they add liquidity to the order book. Likewise, takers pay extra charges for scheduling their trade and setting the right position. 

Analysis: How corporate crypto trading services will be a game-changer? 

You can fetch hefty revenue by providing trading services to corporate enterprises. These VIP and VVIP clients will get several benefits. They receive access to state-of-the-art charts and graphs, personalized widgets, a dedicated account manager, as well as API connectivity with the leading crypto exchanges and Decentralized Finance (DeFi) platforms. 

You can attract high-net-worth individuals (HNWIs) with options like lower trading fees and rewards for doing staking, liquid swapping, spot, margin, and futures trading regularly.  Besides that, institutional investors get an advantage as they can avail of loans by tapping the over-the-counter (OTC) option. Generally, the interest rates are low as investors can use their existing balance as collateral. 

Likewise, as investors build their wealth, they get access to other options like whitelisting of assets, a customized interest rate offering, and treasury management. 

Wrapping Up

Want to give tough competition to banks and financial institutions?  Connect with AppDupe for white-label crypto exchange development. 

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Marketing is my soul mate and writing is my side kick. Using my writing skills to share the knowledge of app development and upcoming technologies.