How does a cryptocurrency exchange trading platform make money?

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How does a cryptocurrency exchange trading platform make money_
How does crypto exchanges make money

“Cryptocurrency” is becoming the new currency mantra in the world of blockchain. In recent times, the crypto industry skyrocketed and made a huge impact on the digital trading platform. It is due to the increasing price of bitcoin and other altcoins in the marketplace. Also, many new traders entered the crypto industry to make profits in a short time. So for crypto trading, traders need a crypto exchange, and here comes the demand for crypto trading platforms. 

Presently, cryptocurrency exchange platforms are gushing everywhere in all parts of the world. Besides, bitcoin exchanges are contributing billions of dollars in the trading volume. Cryptocurrency exchange platforms are known for their facilitation. Yes, No one likes to wait to exchange their money with their currencies for a week or two. The exchanges are done in a minute in this digital platform making the economy operate efficiently. Despite providing a valuable service, it is the cryptocurrency exchange platform that earns more profits in this current economic trend. 

If you are owning a crypto exchange or planning to start a crypto exchange or curious to know about – how crypto exchanges make money. Then this article is completely dedicated to you. So, how do crypto exchanges make money?. In this article, we are going to discuss how cryptocurrency exchanges make money and generate profitable revenue.

But before that, let us see…

About Cryptocurrency Exchange

A Cryptocurrency exchange is a digital trading platform where one can buy/sell and trade all sorts of prominent crypto assets. Such as bitcoin, ethereum, litecoin, dogecoin, EOS, ripple, and much more. Here users can exchange cryptocurrencies using their fiat currencies or else you can trade with any crypto. As of now, there are many best and popular crypto exchanges Such as Binance, remitano, paxful, coinbase, LocalBitcoins, and more. These crypto trading platforms have a great number of user traffic and generate more revenue. When it comes to crypto exchanges, there are different types of exchanges. Such as

  • Centralized crypto exchange
  • Decentralized crypto exchange
  • P2P crypto exchanges
  • Hybrid crypto exchange

As previously said, the usage of cryptocurrencies is increasing day by day. So many crypto startups and entrepreneurs are showing their interest in starting their bitcoin exchange platform by approaching the best cryptocurrency exchange development. Now, you are excited to know how the crypto exchanges make money, right?. So without wasting your time let us dive into our main topic… 

How does the Crypto Exchange help to Make Profitable Income?

Here we list the ideal ways that crypto exchange owners will use for making lucrative money.

1. Commissions

Cryptocurrency exchange trading platforms make more money through commissions. Crypto trading conducted in the exchanges attracts only a minimal amount as a commission considering the banks. But the profit lies in the quantity of crypto users trading and the type of currencies the user trades. In general, a crypto exchange puts 0.01% as a commission for crypto trading. Also, bulky one-time transactions attract a lump fee for the transaction. Minimal charges increase the user value thereby helping you to grow your trading platform further. 

The top crypto trading platforms like binance & Coinbase generate 8-figure commissions and more for successful trading. If a crypto exchange can attract billion-dollar volumes per day. So it becomes clear how profitable this crypto business can become. For instance, Binance handles the largest crypto trading volume(more than $3 billion daily) in the crypto marketplace.

Binance charges about 0.1%, and OKEx charges 0.15% of trading fees from their users. Other popular crypto exchanges like Huobi and bitfinex will charge around 0.2%. Thus, depending on the trading volume on the exchange, an exchange owner can set up the trading fee structure. So, the commission is one of the best ways to earn more money by owning a crypto exchange.

2. Listing charges

A cryptocurrency exchange platform can earn a considerable amount of money by charging listing fees. Listing attracts fees for the service and percentage of profits involved. A trading platform can attract charges for listing in crypto coins and tokens. The Initial Coin Offering (ICO), STO, and IEO are some of the listings that can be done by the trading platforms to earn money.

Exchange owners can earn an enormous amount of money if there is a whopping amount of funds raised on the project. The listing charges depend on the terms and conditions of the crypto exchange. Most of the exchange platforms demand to be paid in cryptos in the range of 1 to 10 BTC for the service. So, going by the tide, you can deduce the listing fees to gain more momentum and profits.

But the fact is that the competition among the crypto exchange has grown tremendously. You must note that competition for crypto coins and the crypto-token listing has become ferocious. Some experts in the crypto space say that small-sized crypto exchanges charge in the range of 1BTC to 5BTC as a listing fee. On the flip side, medium-sized crypto exchanges charge around 10BTC to 50BTC as a listing fee. So each exchange charges different listing fees.

3. Create your market

There is a known proverb that goes like this – “Winners don’t do different things, they do things differently”. That is right. If the exchange operator provides different crypto trading pairs where most of the trading platforms lack. Then it is a revenue stream for the crypto exchange. For instance, EOS tokens are paired with the only USD in many exchange platforms.

As most of the trading platforms will be providing only in USD dollars, there are more chances to make the crypto trading platform stand out in the competition by providing an EOS/INR pair and more pairs. Because many countries are now getting aware of the cryptos and this uniqueness will improve the stability of the cryptocurrency exchange.

4. Margin Trading

Margin Trading is one of the trending features in the crypto marketplace. Here a third-party will be involved in offering funds to perform crypto trading. The margin trading feature has a great set of perks in the crypto exchange. Such as Enhanced Returns, Trading Flexibility, Increased Cash Dividends, Competitive Interest Rates, and more.

When a user performs Margin Trading, he/she needs to pay a certain amount of percentage of the total order. Margin trading is far similar to the concept of leverage. Margin trading offers an ample amount of profits to the crypto exchange due to the high relative value of the trading position. As of now, many crypto trading platforms implement margin trading for their users. Some top-notch crypto exchanges that offer the margin trading feature are Binance, Bitmex, Kraken, Poloniex, Bitfinex, and much more. By using this feature, exchange owners can make profitable money by charging interest to your users. 

5. Token sales and fund collection

Token selling attracts a huge capital for a new start-up. A start-up entrepreneur who wants to invest in any business creates a token with the assistance of a crypto token development. If this crowdfunding platform takes a hit, then a considerable share of profit will be sent to the cryptocurrency exchange platform. The trading platform earns certain benefits from the buyer of the tokens also. It is because, if the start-up does not earn targeted capital for his business, he returns the cryptocurrency to the buyers which is a reversal process. So, It is a win-win for the cryptocurrency exchange trading platforms if they initiate a crowdfunding platform.

6. Withdrawal Fees

In the global crypto marketplace, only a few crypto exchanges charge withdrawal fees. But you must note that leading crypto trading platforms don’t charge any fees for withdrawal. Even exchanges like binance and coinbase don’t charge withdrawal fees. But exchanges like Kucoin charge 0.0004 BTC when a user withdraws bitcoin from their crypto wallet. Likewise, some exchanges are charging fees from their users when they withdraw crypto coins from the wallet. It boosts the overall income of the exchange operator and helps to generate more money.

7. Advertisement

If the crypto exchange is becoming more popular in the crypto space. Then automatically the user base will increase in that platform. For instance, Binance was first launched in 2017 and within a few months, it became the largest and most popular crypto trading platform in the crypto world. Besides these, they gained large user traffic because of low trading fees. So after reaching a certain height in the market, they permit third parties to post ads. Also, they can charge fees for posting ads. This is one of the easiest ways to earn money by charging fees from third parties when posting ads on the exchange.

8. Stake

In general, the staking is used to hold the crypto assets. In crypto exchange, staking is a feature that helps to hold the crypto coins and crypto tokens that are present in the marketplace. In a crypto exchange, when a user is holding a specific crypto asset for a long-term. Then the exchange offers some rewards in the crypto for the users. So by using this feature, an exchange owner can make additional profits. For instance, top crypto exchanges like binance and kucoin have stake features.

Wrapping up

The crypto exchange business is the most preferred crypto business in the present era. As the sprouting of cryptocurrency is growing so fast, it is good to start your cryptocurrency exchange platform to expand your business and earn more profits. So, the above-discussed methods are some of the ideal methods in which the cryptocurrency exchange trading platforms earn money. In case, if you have an idea of creating a bitcoin exchange. Then it is best to start your crypto exchange business now and multiply your profits. All in your hand is to shake hands with the genuine and professional crypto exchange development company in the blockchain marketplace. One such professional company is Zab Technologies.

Zab Technologies is an award-winning cryptocurrency exchange software development company in the industry. We have a great number of years of experience in offering all types of reliable blockchain development services. Zab Technologies is expertise in providing the top-notch cryptocurrency exchange development service with advanced features at affordable rates.

We offer ultra-modern white label crypto exchange software for building the crypto exchange within a few days. Our software is secure, encrypted, and unique because we use updated technologies. This helps in developing your platform to a different level and achieve huge success in your endeavour.

About the author

Steve

I have started my career with Search Engine Optimisation and slowly concentrated on creative part as well. Now I'm working with a leading Blockchain Development Company in India - Zab Technologies

By Steve

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