To Mine Gold Or To Sell Shovels?? - Exploring the Profitability Of 2 Crypto Currency Exchanges
A look at the revenue derived from fees on 2 of the most popular cryptocurrency exchanges; PoloniEX and Bittrex
So recently i began to wonder how much money these businesses are pulling in via fees given such massive trade volumes that have been occurring particularly on PoloniEX. As i am writing this the most popular coin traded on PoloniEX today (XMR) has a trade volume of over 16,000 BTC followed closely by REP with over 13000 BTC.
I began by taking a daily snapshot of the BTC traded pairs on each exchange for which i based the following data off. I only took 1 weeks worth of data for when extrapolating figures out to one year it could be dramatically different than the actual results although should be a good gauge given the current climate. i do not think the week captured was out of the ordinary in terms of trade volume so it should form as a decent base line
Data presented below is captured between 23rd of Sept - 29th of Sept
Maths
- Data presented is derived from 1 weeks worth of trading (23/09 - 29/09)
- The scope of this data set is limited to BTC pairs only
- Fee's are calculated as .4% for PoloniEX and .5% for Bittrex. This is because for every trade/exchange their is a buyer and a seller or a maker and a taker. Each of these participant are required to pay a fee and therefore every trade has 2 fees being paid which calculate to the rates suggested above.
- Revenue suggestions only take into account fee's paid on trades and do not include any commissions on lending assets for margin.
Exchanges
We will be comparing PoloniEX and Bittrex, to my knowledge these are the most popular Altcoin exchanges.
PoloniEX
PoloniEX offers traditional trading of Altcoins and also offers account holders the ability to trade on margin via peer to peer loans facilitated via their lending market. it is generally known as the exchange that offered the most liquidity but has a much smaller range of currencies to trade than Bittrex.
Total Traded - 7 Days
| Metric | Total Traded | Total Fees |
|---|---|---|
| Weekly Total BTC | 179305.28 | 717.22 |
| Weekly Total USD | $108,300,386.97 | $433,201.55 |
| Avg Per Day | $15,471,483.85 | $61,885.94 |
| Estimate Per Year | $5,647,091,606.25 | $22,588,366.43 |
Total Trade Volume By Day
Fee's From Top Traded Pairs - 7 Days
Bittrex
Bittrex offers traditional trading of Altcoins, they have a wide selection of cryptocurrencies including many smaller projects. Bittrex is based out of the US and the founders are very public figures with a presence in most large slack channels. To my knowledge Bittrex is the most compliant altcoin exchange with diligence checks on coins and constant meeting with lawyer to ensure their operation is done by the book.
Total Traded - 7 Days
| Metric | Total Traded | Total Fees |
|---|---|---|
| Weekly Total BTC | 8508.633371 | 42.54316686 |
| Weeklt Total USD | $5,139,214.56 | $25,696.07 |
| Avg Per Day | $734,173.51 | $3,670.87 |
| Estimate Per Year | $267,973,330.44 | $1,339,866.65 |
Total Trade Volume By Day
Fee's From Top Traded Pairs - 7 Days
PoloniEX vs Bittrex
The charts below will compare PoloniEX and Bittrex operations in relation to volume traded, fee's derived and assets traded.
Figures
| Metric | Bittrex | PoloniEX |
|---|---|---|
| Weekly Fees Total (BTC) | 42.54 | 717.22 |
| Weekly Fees Total (USD) | $25,696.07 | $433,201.55 |
| Avg Fees Per Day (USD) | $3,670.87 | $61,885.94 |
| Estimated Fee's Per Year (USD) | $1,339,866.65 | $22,588,366.43 |
Number of Active Markets
Fee Revenue
Conclusion
At an estimated revenue of 22.5 Million USD; i recommend you Sell Shovels.. sell them good like PoloniEX does.
Obviously this is revenue only and does not take into account the cost of compliance, security audits, staffing cost, infrastructure ect.. although 22 Million USD goes a long way and i would be pretty confident that the owners of PoloniEX would be quite happy with their position as the Altcoin markets leading exchange.
The whole crypto market is made up of and run by pioneers, just like the Wild West sometimes the ones in black hats ride in and steal the money held in the local bank.
Indeed but i was amazed at how much money the polo bank has! And given a lot of this volume comes from margin trading which polo takes a cut from the interest on the lending side the actual fees are a bit higher. I also think last week was pretty mild; if i had got the data from this week it would have been much higher..
The size difference is amazing. The other exchanges must be even further back into the dim twighlight. I have been using HitBtc for exchanging some of my CPU mined altcoins, I will try find out their volume to see if they are even viable. Then you have the peer-peer exchanges like bitshares opening up as well
Yes, it's nice to be paying all these fees until they decide to get "hacked" someday :)
One has to wonder as these currencies become more generally accepted will more exchanges start to trade them and will that eat into their profits? Or will it bring more traders to their platforms? Better enjoy their profits while they have em!
I think we will see both. More traders and wider options. Although if regulation comes into it maybe only the biggest and the decentralized players will be able to survive. Bittrex has estimated 800k for MSB
thx for all this data!
You didn't take into account that a large percentage of Polo volume might be artificial, as some believe.
The data above was collected from each coin via the API on a daily basis, so any artificial volume should be included in these figures as well
Yes, but that's exactly the problem. It should be EXcluded, as they are not getting any fees for volume they cause themselves.
Thank you for posting. Awarded......Best Title Of the Day. These are the questions we should be asking. Steem on. Cheers.
Thanks @bleujay :)
How is this related to BitShares or Beyond-Bitcoin? false tagging
Bitshares is a decentralized exchange so this is there target market and competitors and Beyond-Bitcoin is anything related to crypto currencies including bitcoin..