Spotlight on Poloniex: What next for Poloniex?
Challenge entry:
Simplex, neither simple enough nor sufficient
source
In a previous post on this challenge - 'Spotlight on Poloniex' I detailed the adoption of Simplex banking by Poloniex in a bid to introduce fiat-to-crypto transactions on their exchange. Poloniex, famed for being a strictly crypto-to-crypto exchange, seemed to have finally become aware of the adverse effect of users not being able to acquire crypto in their local currency in mainstream crypto trading. The new owners, an Asian backed consortium, sought to compete favorably in the global market and sanctioned a partnership with Simplex, an online payment processor, for the inclusion of fiats on their exchange.
I also detailed the differences between Poloniex and other fiat accepting crypto exchanges with a tabular comparison of their daily trade volumes. I'll revisit this comparison with an updated data of their respective daily trade volumes to review the current performance of Poloniex. I'll also probe further into other aspects of their fiat integration structure to pinpoint what Poloniex have to add to improve on their fiat inclusion to maximize the undeniable benefits of fiats.
A comparison of crypto exchanges' daily trade volume
| Exchange | Year formed | Fiat | Market size | Current trade volume |
|---|---|---|---|---|
| Kraken | 2011 | 6 | 239 | $146.55M |
| Coinbase | 2012 | 3 | 104 | $322.40M |
| Poloniex | 2014 | None | 354 | $22.17M |
| Deribit | 2016 | 1 | 26799 | $245.66M |
| Binance | 2017 | 9 | 1236 | $9.17bn |
Trade volume figures sourced from nomics
Generally, trade volumes have dropped on all these platforms since I mentioned them in this previous post on Simplex. It is however noticeable that Poloniex remains the lowest of the lot in daily trade volumes. Just like the previous post, I'll be comparing Poloniex with Binance, the highest amongst the selected crypto exchanges in daily trade volume. This is because Binance started after Poloniex and has lots of altcoins like Poloniex. They also have 9 fiat currencies included in their exchange but they are thousands of stories ahead of Poloniex.
Fiat on Binance vs Fiat on Poloniex (via Simplex)
Since I hold accounts in both exchanges, I'll be telling you what it feels like using fiat on both platforms.
On Binance
On Binance, fiats are not just used to buy crypto, they can be deposited just like cryptocurrencies. For buying cryptos with fiats, binance provides a lot of options to make cryptos very easy to purchase using fiats. A user can acquire crypto via the use of bank deposits, credit or debit cards, P2P trading and cash balance
Every user wants to have those numerous options and that's why Binance trumps any other exchange on buying cryptos with fiats. Their daily trade volume confirms that. Now to the buying process, in my local currency NGN (Nigerian Naira), it is important to note the lowest amount that can be used to acquire crypto on Binance. Take a look at a screenshot of my Binance account below to see the minimum amount that can be used to purchase crypto
The minimum price is just NGN1,000! That's not even up to 15 STEEM currently. Unbelieveable when you've been used to Poloniex but that's another strength of Binance. It makes buying crypto affordable to everyone. Let's face it, everyone with internet connection in Nigeria can spare NGN1,000 when it comes to trying out crypto for the first time. Now, Nigeria is rumoured to have about 24 million internet users. Little wonder 25% of Binance's fiat quote is dominated by NGNSource
A vast array of options and affordability has been the major reason why most people have chosen to carry out their trades on Binance.
I'm only mentioning these two because I'm assuming that you already know that Binance sealed their place in the crypto industry using the holy grail of crypto trading - low fees. Usually their fees for buying crypto with a local card is 3% but sometimes, they bring it down to 1%.
On Poloniex
Fiat on Poloniex is all about Simplex banking. While Simplex provides a secured way of acquiring crypto, it is literally costly in more ways than one. The minimum amount that can be used to make a purchase is
$50! That's about NGN19,025 at NGN380/$. That's well over 150 STEEM currently. Now how about that for a minimum? Tell you what? Nothing will make me invest that much as a first timer. Frankly. Despite the numerous competitions and tournaments churned out on a regular basis to incite deposits, this minimum amount remains a drawback in buying crypto with fiats on Poloniex, thanks to Simplex.
The truth is...Simplex is not simple enough. I don't mind losing NGN1,000 on my first crypto expedition but not NGN19,000. There has to be a drastic reduction if crypto users in Nigeria are to be lured to Poloniex.
Talk about variety in crypto purchases on Poloniex using fiats and it's still the same 'Simplex story' all over again. Don't mind the bank transfer part, cause it's only through Simplex bank account which is not for everybody and by the way, why sanction only one bank account for bank transfers in the first place? That's anything but variety.
I'm not supposed to talk about the fees on Simplex because I'm trying to spare some credit. But if you're wondering, it's a 'Gimme-that' kind of charge pattern. Why are they not wanting to realize below $10 on each crypto-purchase-with-fiat transaction?
Take a look at my final comparison
Final comparison - Binance vs Poloniex (fiat inclusion only)
The final comparison of both exchanges on their approach to fiat inclusion is tabulated below.
| Binance | Poloniex |
|---|---|
| Integrates fiat directly | Partners a payment processor |
| About 4 different crypto acquisition options with fiat | Only one option as far as acquiring crypto with fiat is concerned |
| Minimum spend of NGN1,000 on crypto acquisitions | Minimum spend of NGN19,025 on crypto acquistions |
| 1 - 3% transaction fee for crypto purchases with fiat | 3.5% or $10 - whichever one is greater |
| $9.17bn current daily trade volume | $22.17M current daily trade volume |
Conclusion
There's a lot to fine tune in this Simplex-Poloniex partnership and in Poloniex's fiat inclusion as a whole. Simplex is not sufficient and it's not simple enough. There has to be lower fees and lower minimum amounts to lure new crypto investors to the exchange. Considering that Poloniex have their sights set on the global markets, a greater percentage of the new investors and the old time users in this global market want to take their crypto journey 'inch by inch'. Large amounts of cryptos is likely to not be the intention of most new investors.
A variety of options is also very key as people are always attracted to variety. It is worthy of note that a lot of people don't use cards for transactions hence the need for bank transfers. Poloniex has to come up with a structure that supports bank transfers from local banks in various countries. Adding relevant options like depositing and P2P trading could also prove to be beneficial, I mean, you can't have too much options.
Bottom line, for reasons bordering on charge amounts, minimum purchase amount and ease of purchase, I reckon that Simplex is neither simple enough or sufficient for crypto purchases with fiats on Poloniex.
Twitter share
https://twitter.com/ChuksShua/status/1328070126701326343?s=20
Thank you for this new subject which can open new perspectives in order to improve exchanges in Poloniex, it is true the alliance with the Simplex bank has several limits such as the prohibition of sales, the countries which have the right to purchase of which my country does not exist and the fixing of the daily and monthly amounts then it becomes a necessity to vary the sources of supply of the accounts by simpler and more practical solutions.
Bingo. I didn't even broach the matter of selling because that would have utterly trashed Simplex and Poloniex. The sophistication other exchanges like Binance offers when trading or buying with fiats make Simplex and Poloniex look like a Joke. The countries not supported is one thing, the daily and monthly amount is another and then there is the issue of prohibition of sales.
There's actually a lot to talk about in terms of the shortcoming of the Poloniex-Simplex partnership. I hope the brains behind Poloniex are not over looking these shortcoming cause as long as they are still there, all attempts to lure more users, especially new ones, to Poloniex might as well be similar to putting lipstick on a buffalo or at best rarely productive. The daily trade volume stats supports this.
Can I ask what country you're from?
#affable