Besides Trading Fees, How do Exchanges Make Money?
Exchanges have capitalized extremely well on the cryptocurrency market’s explosive growth. Binance, for example, expects yearly profits between $500 million and 1 billion despite the bear market that’s been in effect for the majority of 2018 so far. The exchange has already secured $300 million in revenue in the first half of this year.
Trading fees are of course an important source of income for cryptocurrency exchanges, but they also have other ways to make money.
Trading fees are of course an important source of income for cryptocurrency exchanges, but they also have other ways to make money.
Listing Fees
If your coin is not on exchanges, it’s almost as if it doesn’t exist. Cryptocurrency exchanges are well aware of this fact, and require listing fees to be paid before they add a cryptocurrency on the platform. Of course, not all exchanges demand listing fees for every project, but the practice has become very widespread. Business Insider says exchange listing fees range from $50,000 to $1 million, but there have been even larger numbers floating around cryptocurrency discussion forums.
It’s hard to confirm these figures, since most exchanges require projects to sign non-disclosure agreements before finalizing any deals. After a token is listed on major cryptocurrency exchanges, its value often increases, so projects such as ICOs, who hold large amounts of their own tokens, are willing to pay large amounts.
Fees on Withdrawals and Deposits
Many exchanges deduct some amount of assets as fees when you withdraw them from their exchange. The rate varies according to different exchanges. And some of them also charge you when you deposit your money.
Dark Pool Trading
The name sounds very sisnister, but dark pool trading is simply trading where no one can see the quantity and the price of assets being purchased. Big VCs and institutional investors use dark pools to purchase or sell a large number of assets so that the market will not get affected and they will get their assets at a reasonable price.
Exchanges can charge substantial fees on these trades as the investors are getting a large number of coins without driving the price of the asset up.
Airdrops and Other Promotional Activities
Exchanges charge different companies to support their airdrops and other promotional activities. In this way, a user can directly take part in the airdrop of a coin by registering themselves on the exchange.
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