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As curiosity over the usage of cryptocurrencies keeps growing, the earning potential consequently expands too. Profits worth billions of dollars can be made by launching a White label Crypto exchange as it offers massive earning opportunities for traders, investors, and exchange owners.
Some of the main sources of revenue for a cryptocurrency exchange software are
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Listing out a new cryptocurrency
The crypto market has evolved quickly. Earlier, crypto markets were launched on their own platform with a limited user base through Initial Coin Offering (ICO) and Security Token Offering (STO). To grab a larger target market, project owners are launching their ventures on Initial Exchange Offering (IEO). IEO benefits both project owners and exchange owners. Project owners can get more investors by moving out of their existing user base. Exchange owners will get money in the form of listing fees. The fees depend on the size and popularity of the exchange. Small exchanges can charge around 5-10 BTC per listing, and medium exchanges can levy around 10-50 BTC per listing. Large and well-known exchanges can demand a whopping $2 million per listing since the value of tokens multiply fast after they get listed.
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Launching own crypto token on an exchange
Additional revenue can be generated by crypto exchanges by launching crypto tokens or coins on the exchange. Incentives can also be given to traders in the form of discounts on trading fees for dealing with the coin. This can increase the reading volume of the coin and enhance the earnings of the company. Special loyalty tokens can also be designed based on the user’s preference.
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Trading commission
Cryptocurrency exchange software can make money by imposing trading fees on traders for each successful transaction that brings a buyer and seller together. It varies from exchange to exchange. For example, Coinbase charges around 2.9% as trading fees while Binance levies only 0.1%. As exchanges witness an increase in trading volume, it is better to reduce trading fees in line with the principle of economies of scale.
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Deposit and withdrawal fees
It is one of the fundamental earnings for a cryptocurrency exchange platform. Every user has to pay a prescribed amount in the form of deposit or withdrawal fees when they transfer or withdraw cryptocurrency to the platform since they are storing money in the wallet. It is also different from one platform to another. For example, in Coinbase, bank transfers used to deposit fiat currencies are not charged. However, usage of credit cards or debit cards to buy Bitcoin will be charged a fee of 3.99%. Hence, fees vary based on the deposit method too.
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Schemes for staking cryptocurrency
This works just like a fixed deposit. The commission will be earned by crypto-asset owners for locking in a specific number of crypto coins or tokens for a fixed time. This can ensure adequate liquidity in the platform and promote the diversification of funds. The huge corpus collected can be re-invested in other industries such as the stock market or real estate to multiply earnings. It will also protect from market risks.
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Consultancy fees
Through expert consultation is provided to traders and investors, White label crypto exchange owners can get another source of revenue. Advice regarding which crypto token to buy/sell, to go for a long position or a short position can be provided to investors through one-on-one sessions. Trading bots can be set for investors which will execute trades automatically and use indicators to recognize trends.
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Market making
This technique involves making use of the difference between the bid price and the asking price in an automated trade. Digital assets will be bought and sold on their own exchange at a lesser price than other exchanges. The exchange owners will make the trade on different exchanges and pocket the price difference. Sometimes, new trading pairs offering different native currencies can be offered out of existing instruments. Revenue is earned through liquidity and stabilized spreads.
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Dark pool trading
This technique is used by big venture capitalists and institutional investors to purchase or sell a large number of assets without affecting the market. This is mostly done secretly. The prices of assets are not known. A substantial amount of revenue can be earned through these activities by White label Crypto exchanges as investors get a large number of coins without influencing the price.
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Extra charges
Additional charges in the form of KYC solutions, multilateral trading facilities, and usage fees for third parties accessing the backend/ infrastructure for wallet integration.
White label crypto exchanges have devised different ways to make money. As competition grows tougher, they have to figure out innovative methods to raise funds by providing specialized services to users to survive and remain relevant in the long run.
