In recent times, the most profitable way to earn handsomely from the high demand for cryptocurrencies is by investing in Cryptocurrency exchange development. The huge revenues earned by some of the leading exchanges have outperformed the financial prowess of some popular financial institutions.
Some of the main sources of revenue of Cryptocurrency exchange software owners are
- Trading commission – Every crypto trader will have to pay a corresponding trading fee to the exchange for every successful transaction executed on the platform. The percentage charged by each exchange will vary. It generally varies from 1 to 3%. Some of the leading centralized exchanges in the world, such as Coinbase, charge 2.99% as commission, whereas Binance charges only a minuscule 0.1%. It acts as an important source of revenue for cryptocurrency exchanges irrespective of whether the market conditions are bullish or bearish.
- Listing of Initial Exchange Offering (IEO) and new cryptocurrency – While Initial Coin Offering (ICO) helped to launch many crypto projects off the ground, the focus has shifted to Initial Exchange Offering (IEO) where crypto projects are being launched successfully on popular and existing exchange platforms depending on the number of traders and the brand awareness the project can acquire from that particular exchange. An IEO is beneficial as a flexible period of sale can be determined by the admin of the website after discussing it with the token owner. The tokens can be bought on the platform using the leading cryptocurrencies such as Bitcoin or Ethereum. Hence, exchange owners would be tempted to launch a stable product in a lesser period. The traders would be assured of the legitimacy of every upcoming project. The owner of the platform would earn revenue regularly by levying listing charges on the users. The rates would depend according to the popularity of the exchange be it a customized exchange or a White label Bitcoin exchange. While average exchanges charge around 5-10 BTC per listing, medium-sized exchanges impose a fee of around 10-50 BTC per listing, and large exchanges charge a whopping $1-2 million per listing.
- Launching a crypto token on a White label Bitcoin platform – This concept can better be understood with the help of an example. The world’s leading centralized exchange, Binance launched its own crypto token named BNB (Binance Coin). They got a significant user acquisition for their token by giving extra commission on trading and other lucrative options.
- Deposit and withdrawal fees – Hefty charges are imposed on users for converting the leading fiat currencies regardless of the conversion amount. The fees are quite less if a user opts for crypto-to-fiat or fiat-to-crypto trading. A low conversion rate charged on deposits and withdrawals can attract more users to your exchange platform. This would motivate investors and traders to kickstart trading operations and also pocket a sizable share of the profits elongated by the exchange owners.
- Consultancy fees – Despite huge interest garnered for cryptocurrencies, many people need solid financial advice to trade and invest in these volatile digital currencies. This has opened up a new business model for companies interested in Cryptocurrency exchange development that is getting paid for providing valuable consultancy services to crypto traders and investors.
- Cryptocurrency stacking schemes – Stacking has become a major strategy used for cryptocurrency exchange software development. The funds belonging to the traders will be locked up in the custody of the exchange, and they would be provided an interest rate ranging between 1 and 10%. Hence, exchange owners can create more profitable revenue streams by diversifying their existing investments.
- Liquidity – It is an effective way to earn revenue. It involves showcasing a higher trading volume on your exchange platform by fetching external trading orders from other cryptocurrency exchange websites through API’s.
- Dynamic pairing – It is a well-known tool to add and pair ERC20 compatible tokens to the crypto exchange from the admin panel anytime without any technical assistance. The power to implement dynamic pairing will be vested with the admin of the cryptocurrency exchange website who will add tokens and trading pairs with the desired cryptos.
- Margin trading – An automated trading bot can be used to increase the trading volume of any number of pairs. Users can utilize the services of the bot and make a healthy profit. Orders will be automatically matched with the trading volumes located in the crypto exchange. The bot features can be uniquely maintained for each trading pair in the crypto exchange. The orders can be executed either through virtual dummy balance or virtual real balance.
Integrating the usage of cryptocurrencies into your platform offers a plethora of benefits as it ensures cost-effective execution of business transactions and provides a real-time exchange of digital currency at the best market rates. Cryptocurrency exchanges are highly secure with no chances of chargeback. It facilitates access to a global marketplace, and also renders easy conversion between different cryptocurrencies.
A few factors that cryptocurrency exchange software owners must consider when structuring their business model
- How the crypto coin to be launched will fit into the business operations.
- Fixing the commission fees on the exchange platform for connecting various buyers and sellers directly.
- Will a separate fee be charged for access to online products or services on the platform in the form of a smart contract.
- The rates to be imposed on different advertisers and marketers who want to target the investors registered on the platform and provide crypto-related services.
- The payment solution to integrate into the exchange platform for processing transactions and executing trades.
The popular business models in the cryptocurrency exchange development industry are Bitcoin wallet startups, Bitcoin mining startups, Digital asset exchange startups, Decentralized exchanges with atomic swapping services, Security Token Offerings (STO’s), Private Blockchain implementation for selected industries, token development, and token exchanges compatible with ERC20 token standard.
Every transaction executed through the exchange platform has scope to bring revenue for a business firm. The money will start ticking in the long run. The primary thing is to start and to gain much-needed trust from the traders. Once the crypto exchange website crosses the initial bottlenecks and starts getting traders regularly, the profits earned will become higher consequently. The strength of the business model will determine the success of the cryptocurrency exchange software. Hence, investing in the business of cryptocurrency exchange development may prove to be a viable opportunity for consistent revenue generation.