Introduction: Due to the unexpected and unprecedented plunge, the “reality” behind crypto exchanges has been gradually exposed.
Picture | From the Internet
Over the past quarter, in virtue of the covid-19 outbreak, the global capital market has crumbled. The combined impact of the oil price crash and the US stock market meltdown has caused a huge drop in the Bitcoin price to USD $3,800 (by 60%, the biggest daily decrease since 2014). At the same time, other altcoins have faced the same situation as well. Due to the unexpected and unprecedented plunge, the “reality” behind crypto exchanges has been gradually exposed.
———-I’m a lovely cutting line———-
█ Top Exchanges: Snatch and Bankruptcy
In essence, the blockchain market bases on the competition of the stock market. Recently, although the BNB market situation does not seem outstanding, it has not influenced the attention attracted by Binance (i.e. recruiting sexy women for customer service, purchasing the world’s biggest data and ranking website CoinMarketCap with USD $400 million on 2nd April).
Since 2017, by virtue of the trend from Western Europe, Binance has always played a striking role in the industry. It has also done a lot in business, such as developing the option business, launching the Binance mining pool, etc.
1. Developing the Option Business
The competition between exchanges has been gradually evolving. Initially, some exchanges made profits mainly by charging handling fee, listing fee, and launching platform tokens. However, due to the lacking interest and increasing number of exchanges, such profits have been decreased a lot. For those contract exchanges, the profit is dependent on the market situation of altcoins. Thus, in the last two years, the trend has been turned to the derivatization of exchanges.
The rise of contract exchange dates back to the 4th quarter of 2018. In the October, there were over 10 contract exchanges established. In 2019, the number increased considerably. According to Feixiaohao, among the current top ten exchanges, seven open the business of option contract, which reveals the popularity of contract.
On 3rd April, Jennifer, account director of Binance in the Greater China region, said in the community AMA that Binance was going to launch the option trading very soon.
Over the past two years, in the field of OTC trading, it can be said that Binance has come out first, while it didn’t catch up with OKEx in the derivative market. In terms of the trading volume, the derivative market performs much better than the OTC market. According to the statistics in March, the trading volume of OKEx has reached 98,436 orders per minute, which ranked first among all exchanges.
The boom of the contract market has appealed to Huobi and Binance to get involved into the competition. The conflict among these three giant exchanges bases on the seizure of stock users. Even though Huobi, Binance and other trading platforms have been constantly exploiting their contract business to defeat OKEx, the initiative has been seized firmly by OKEx to shield its market. Hence, for so many exchanges, it is doomed to be a drastic battle in the number of stock users.
2. Launching the Binance Mining Pool
The mining industry is highly competitive and full of share exchanges. The dominant position of head mining pool is stable, but share exchanges still exist. Additionally, an increasing number of players intend to share the dividend, while only a handful of them can reach the goal. It can be said that the scale effect of mining pools has been obvious.
On 1st April, Changpeng Zhao posted a tweet, showing that Binance was going to kick off its mining pool business. Previously, at the beginning of this year, he revealed that the mining pool business would be touched on, as it was not a field that Binance had been involved into.
Apart from Binance and Huobi, the mining pool business of OKEx came online in March and October 2018 respectively. The POS mining pool business of Huobi has an outstanding result and ranked 1st around the globe. Recently, some statistics were published, suggesting that, in 2019, Huobi earned CNY ¥2.278 billion in 2019, which rises by 549.27% compared with 2018 (including CNY ¥44.1968 million of profits, which rises by 218.19% compared with last year). Without a doubt, the mining pool is filled with “gold”.
So this time, will Binance be able to return the Chinese market through the mining pool business? Let’s wait and see.
█ Second and Third-tier Exchanges: Bankruptcy and Escape
Although some second and third-tier exchanges are able to have revenues by listing pattern tokens and doing marketing to acquire traffic, these are utterly inadequate measures under such difficult circumstances.
In 2020, dozens of exchanges have become preys, including Fcoin, CoinMex, IDAX and other second and third-tier trading platforms that were high-profile.
FCoin exchange is the hottest exchange in 2018, whose total trading volume was more than the aggregate of other two exchanges. However, it finally waned after two years.
On 11th February, FCoin made the announcement of shutdown. Although it revealed that the exchange would reopen in the future, there is almost no possibility for its collapse of trust system.
On 25th February, CoinMex exchange, which was invested by numerous well-known institutions, made an announcement that all of the trading pairs would be delisted, and the operation would shut down as well.
3、Escape of IDAX Exchange
IDAX exchange ranked the world’s top 20 at its peak. Last June, IDAX launched the IT distributing system, when the doom has been foreseen. Currently, due to the attack from several countries and the CX pattern, the escape has become the sole ending of such a reaper.
A constant bear market enables us to see that the second and third-tier exchanges can only sacrifice to be the victims of three giant exchanges, as a result of disorganized operational patterns and weak foundations.
Survival of the fittest will always be dominant. Apart from the trading platforms above, there are loads of other exchanges suffering, such as MGEX, ZBTC, USDTEX, BW, SOXex and so on. You name it.
█ New Direction for Exchanges: Serving 2B Market
On the 2C market, crypto trading is undergoing a huge storm, while the 2B market appears much milder.
The 2C market bases on fast goods and has a huge range of consumers, on which explosive advertising works rapidly to capture influence and more consumers. By contrast, the 2B market characterizes short goods, which depends more on the feature, demand, user group, decision-making method, and professionalism of the platform.
Thus, for the existing trading platform, even though some top trading platforms are competitive on the 2C market, the real customers on the 2B market actually gather in the Internet industry (i.e. Microsoft, Amazon, Alibaba and JD).
The crypto trading platform able to base itself upon the 2B market is less likely to wane in the industry. IDCM is a good model in terms of serving the 2B market and empowering the real industry.
IDCM exchange, which was established in October 2017, is the world’s first platform achieving the exchange alliance. In November 2017, it founded the first alliance exchange in Vietnam. Subsequently, more and more alliance exchanges of IDCM have been gradually established in many countries and regions over the world, including Dubai, South Korea, Japan, Estonia, Taiwan, Hong Kong, Macau, Singapore, the Philippines, South Africa, and Canada.
For an increasing number of alliance branches, IDCM not only provides fairly healthy cash flow, but also enlarges their influence. For instance, the branch in Vietnam has become utterly well-known, as it entered the market at an early time and enhanced the localized services. Previously, IDCM randomly investigated one thousand crypto players in Vietnam. Among them, 66.5% heard of IDCM and 31.2% were using IDCM; The 7-day trading volume of IDCM global alliances is over US $ 874 million. Considering the occupation of Vietnam users, it means that the trading volume for each Vietnam investor is US $ 534.78.
Subsequently, IDCM provided the operation service for the subsidiaries to further cement our bonds and partnerships.
In the meantime, IDCM has been endeavored to exploit the practical application of blockchain technology. Previously, for example, IDCM have made great partnerships with Congo, AMA and the Ministry of State Security of Cambodia respectively to meet their needs by offering corresponding blockchain solutions.
During this long period of bear market, some exchanges accumulate power to get through the crisis; some have been beaten and ended up going bankrupt and escaping; others take a distinctive approach and thereby stand out in the industry. In the future, where are these exchanges heading? Let’s wait and see.