In the last two years, a Cambrian explosion of cryptocurrency
exchanges has given traders a plethora of options.
This cornucopia of
choice has not resulted in a corresponding increase in quality, however.
Most of the platforms that emerged in 2018 have struggled to gain
traction, with tier one exchanges increasing their market share and the
long tail leaving the also-rans to fight over the crumbs. In 2019, a new
crop of crypto exchanges seem determined to learn from the mistakes of
their predecessors. This year, differentiation is everything.
Also read: These Are 2019’s Biggest Cryptocurrency Winners and Losers so Far
Collaboration and Differentiation Are This Year’s Exchange Trends
Two seemingly opposing trends are emerging in the crypto exchange landscape. The first of these, as recently reported,
has seen crypto exchanges list one another’s native tokens in a quid
pro quo arrangement. Bitfinex has added a number of rival exchange
tokens, while Kucoin bit the bullet this week and listed BNB.
The prospects of Binance returning the favor and listing KCS seem
unlikely, though CZ was swift to congratulate Kucoin on its decision,
describing it as a “very smart move” that will “attract BNB traders and holders, especially users we had not been able to service.”
Exchanges need good projects. How many exchanges
can afford to not have access to Binance Chain tokens/projects? If you
are going to support it sooner or later, then sooner is better.
— CZ Binance (@cz_binance) June 19, 2019
While some exchanges have been
cosying up to the competition, others have pulled in the opposite
direction, seeking to distinguish themselves from their rivals through
introducing new features and services, and deploying token models that
do more than simply ape BNB.
It’s taken time to germinate, but exchanges are starting to realize
that mindlessly mimicking the market leaders is not a recipe for
success. Cryptocurrency exchanges that are willing to innovate stand a
better chance of grabbing enough market share to last the course.
Coinsbit Exchange Adds New Features
Coinsbit
is introducing a number of novel services that will help to distinguish
the exchange from the competition. A P2P lending service will enable
microfinance, with users able to lend and borrow money via the Coinsbit
platform. Borrowers are not obliged to produce their credit history, and
can obtain finance while maintaining their privacy. The exchange is
also planning an invest box service, which remunerates users who deposit
cryptocurrency in the form of interest paid on various coins.
Digitex Tries a Different Token Model
Digitex
is trying an unusual token model. The forthcoming futures exchange
promises a zero-fee system subsidized by a low inflationary model in
which new tokens can be minted with the approval of existing DGTX token
owners. The platform’s CEO, Adam Todd, explained to news.Bitcoin.com how
this model “allows us to operate sustainably without ever charging any
transaction fees on any trades … allowing our traders to pursue high
volume trading strategies with very low profit margins that are not
viable on fee charging exchanges.” He added:
This creates highly
liquid markets where the most active traders are encouraged to create
liquidity instead of being penalized by commissions. On top of that, by
not constantly draining liquidity from the exchange in the form of
trading fees, traders on our exchange have a much higher chance of
winning because that money is instead available to be won by other
traders.
Other exchanges, seeking to find their niche, include Bilaxy,
which, together with the likes of Bitmax, is attracting a reputation
for listing new tokens first. In the last 24 hours, the two platforms
succeeded in listing algorand ahead of Binance, Kucoin and Coinbase
Custody. With cryptocurrency prices surging again, renewed public
interest will incentivize the creation of yet more crypto exchanges.
Most won’t gain enough traction to make a dent in the market. The ones
that survive will demonstrate that they are capable of doing more than
copying the market leaders.
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