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Monetization of Cryptocurrency Exchanges

by Denver Hemsworth 11 months ago in investing
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Source of income for Crypto Exchanges

In digitalization, new technological advancement has paved the way to the innovations like Cryptocurrency instead of fiat currencies. Blockchain technology is a more stunning innovation that is base on forthcoming features and trends in the crypto realm.

More young entrepreneurs are passionate about starting a crypto-based business like cryptocurrency exchanges. As per the present scenario, more people are interested in acquiring cryptocurrencies. One can acquire cryptocurrencies by having a wallet to store, trade them on the crypto exchanges.

You may think "why people interested in starting a cryptocurrency exchange?"

Let us find a reason behind starting a crypto exchange, why people want to be part of thriving businesses

Cryptocurrency Exchange

The cryptocurrency exchange is an online platform to trade crypto to crypto and crypto to fiat currencies. It is going to act as a bridge between the seller and buyer. Cryptocurrency exchanges work based on a consensus algorithm for trading cryptos among the traders. Traders can desire

1)what type of cryptos they want to have,

2)to whom they want to sell their cryptos,

3)they decide their price value for the crypto they are having.

The liquidity is important to grasp more users onto the exchanges sites. There are multiple types of cryptocurrency exchanges like:

Centralized

Decentralized

Hybrid

Topmost Cryptocurrency Exchanges in 2021

There are many cryptocurrency exchanges, and Here we will see the topmost among those exchanges. The crypto exchange has the highest liquidity and trade volume per 24hr.

The topmost cryptocurrency exchange in terms of 24-hour trading volume include:

Binance: $44,292,835,492

Huobi: $10,142,837,831

Coinbase: $8,829,998,800

FTX : $4,477,601,294

KuCoin : $2,599,707,039

There are more cryptocurrency exchanges globally, and new cryptocurrency exchanges are emerging in the market.

How Cryptocurrency Exchanges Monetize?

There are various types of charges exchange for various transactions

Deposit Fee

Some exchange offers are free of deposit charges on registering on their exchange platform. Deposit is similar to purchasing cryptocurrency by choosing a type of currency and making payment for that in fiat currency.

Usually, crypto exchanges charge a deposit fee for purchasing cryptocurrency. In some crypto exchanges, you must have a minimal amount of deposit for opening an account for allocating a crypto wallet.

Withdrawal Fee

Crypto Exchange charges a withdrawal fee for withdrawing cryptocurrencies to your wallet. These withdrawal fees differ from exchange to exchange. Users can either pay a flat fee or a percentage of the crypto you transfer.

Trading Fee

Cryptocurrency exchanges charge a trading fee for executing the user desired transaction like Buying and selling on the platform. The exchange platform act as a bridge between the buyer and seller on completing the transaction securely. Usually, cryptocurrency exchanges charge a percentage of the amount according to their transaction. Binance is the world's largest crypto exchange, which charges less trading fee of 0.01%, and high trading volume. For example, your transactional amount is a $1,000,000 volume, then the exchange would charge a transaction fee of $1,000.

Listing Fee

The crypto exchange charges a fee for listing the new crypto tokens and coins on their exchange for trading. The Crypto Token Or Coin must pay some fractional amount to the crypto exchange for listing them for users for trading them. The crypto exchange decides the listing fee according to the market cap of the token being listed.

In the early phase of crypto exchanges, they don't get sufficient earning from the trading fee. The trading fee depends upon the trading volume of the exchange, and the listing fee is the marginal amount of revenue for new crypto exchanges.

Market Making

Affording liquidity for a given market essential venue for cryptocurrency exchanges. Market making belongs to the method of buying and selling a digital asset on your exchange, but at slightly lower prices than on the other exchanges.

In some new crypto exchanges offers rewards like tokens to their trader for performing trades on specific cryptos. These rewards may be encouraging them to trade them on their crypto exchange. Cryptocurrency exchanges liquidate the transaction fee collected or part of the profit onto their exchange to improve their liquidity.

IEO, STO, and ICO Fund Raising

ICO, IEO, and STO are the launchpad is used for fundraising to new tokens, and coins investors for raising their crypto business. They charge a percentage of total yields as a fee when they collect funds on behalf of the firm. This would be a notable payout to the hosting exchange, depending on the total amount raised.

This way cryptocurrency exchanges earn from various fees for various services offered on the exchanges. One can start cryptocurrency exchange with the help of acquiring Binance clone script.

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About the author

Denver Hemsworth

NFT Marketplace Development Services

NFT Gaming Platform Development

NFT Exchange Platform Development

NFT Token Development Services

Rarible Clone Script

OpenSea Clone Script

Decentraland Clone Script

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