Crypto Exchanges: Kraken Leads by Number of Trades, Despite Binance’s Hype Advantage
An analysis conducted by DataLight on the top cryptocurrency exchanges in the industry has shown the number of trades conducted on exchanges is on the whole correlated with the amount of hype surrounding them, although there are some notable exceptions.
As the crypto ecosystem matures, competitiveness increases and cryptocurrency exchanges know that all too well. While years ago the now-defunct Mt Gox handled 70% of bitcoin’s trading volume, there are now over 240 crypto exchanges battling for dominance.
Given the competition, various crypto exchanges have been using their social media channels to get more users and subsequently increase their trading volume and revenues. Others have opted for other methods, including the controversial trans-fee mining model.
Binance is often seen as the number one exchange in the space. Our analysis has shown that it doesn’t just lead in trading volume, but also in terms of hype – how much it’s being discussed on social media and how popular it is.
The cryptocurrency exchange has amassed a large following on social media, thanks to its popularity and being able to thwart large-scale attacks on its platform. After creating a Secure Asset Fund for Users (SAFU) in the wake of an attempted attack, memes about it started being created. Its CEO Changpeng Zhao, who has nearly 300,000 followers on Twitter, often participates in the fun.
Big upgrade. Funds are safu! https://t.co/1DV1sVpI93— CZ Binance (@cz_binance) June 25, 2018
The social media marketing (SMM) strategy is one used by all of the exchanges to varying degrees of success. Coinbase, a popular on-ramp to the crypto market, has also created a large following on social media. However controversial listings and arguably insecure updates to its platform have caused a lot of unrest in the crypto community. The recent acquisition of Italian startup Neutrino led to a whole movement against it.
The movement, #DeleteCoinbase, saw users post pictures and videos of themselves deleting their accounts on the platform. Nevertheless, Coinbase still stands out in number of trades, coming close to Binance.
Poloniex, Gemini, and Bitstamp are near the bottom in terms of hype and number of trades, yet are popular exchanges with significant trading volumes. These exchanges perhaps have fewer users than other more popular ones, but are still leading in volume as the users they do have are more likely to be from the «institutional» camp, meaning the amounts they trade is larger.
As such, social media may not be the best channel for these platforms to grow their user base.
Kraken, the exchange with the largest number of trades during the analyzed period, bucks the trend by having a low hype score but over 41.9 million trades during the analysis period.
Acquiring cryptocurrency futures trading platform CryptoFacilities may be related to its success, as it linked its firm to more professional traders. Its platform may be attracting, however, traders who are incentivized to make large numbers of trades.
TheBlock has recently alleged an institutional trader it spoke to has compared what he claims to be suspicious behavior on Kraken to what has been seen on exchanges being accused of wash trading. Bloomberg has also reported Tether trading pattern on Kraken «defy logic.» The report reads «huge trades move prices about the same as small ones, ignoring the normal rules of economics.» These allegations of wash trading could explain Kraken’s high trade amounts and relatively low hype scores.
It’s worth noting Kraken countered both reports, by claiming TheBlock’s report was biased against it, as it merely described a large sell-off occurring when about 10% of its daily trading volume was entered in an order at once. As for Bloomberg, it pointed out in a blog post Tether’s USDT stablecoin «enjoys price stability due to arbitrage and design,» and that USDTs trading volume on Kraken is a «miniscule market.»