Topic: Instant Exchange VS a CEX: Who Wins? - page 2. (Read 317 times)

I honestly didn't expect that the difference would be that big. I knew going in that instant swap platforms aren't worth it, but I thought it would be a closer call.

I couldn't think of a better one, lol. Any ideas?
They are both CEXs, you are right, but I did find it interesting that ChangeNow claims that they are "free of custody" on their homepage. Non-custodial? I seriously doubt that. It could just be a false claim that they are making. I don't think that their clients are shown the private key of the address they are depositing their coins into. I wonder what they are basing that claim on...

Nice experiment. Though the result was totally expected, it's great to see actual numbers.

I'd probably pick a more accurate title though. Technically both sides are CEXs, it's just that Binance is just a typical orderbook exchange while ChangeNow aggregates through multiple exchanges and adds a fee for the convenience.

I have always wondered if it makes sense to use an instant cryptocurrency exchange such as ChangeNow or Changelly compared to a popular CEX, for example. Of course, I am not talking about the trustworthiness, security, or safety of funds, but rather about the amounts of crypto you will get if you trade on such a platform.

I decided to perform a test to see how much you can get on an instant exchange compared to a CEX for different values: a small, medium, and high amount.

This is, of course not accurate, because I didn’t perform any real trades but just checked the values that the tested sites displayed. But nevertheless, it did show me which of these two is better.

I tested Binance versus ChangeNow.

Binance because it’s one of the most widely used CEXs and ChangeNow because it’s one of two instant swap platforms that I could think of from the top of my head. It's important to remember that ChangeNow is not a DEX or a non-custodial platform even though they claim to be "free of custody"(Source). 

The results

Scenario #1

For the first test, I wanted to purchase a small amount of bitcoin by exchanging a stablecoin for it. So, I decided to check how much BTC I could get for 50 USDT.

Binance

50 USDT would get me 0.00086 BTC on Binance.



According to preev.com, that was around $49.78 at the moment I did the check.



ChangeNow

The fixed rates on ChangeNow showed 0.00084595 BTC if swapped with 50 USDT.


According to preev.com, that was around $48.99 at the moment I did the check.



Which exchange is better for scenario #1?

At first glance, you would think Binance is the better option. And yes, you will get a little bit more BTC on Binance. However, don’t forget that Binance is an exchange. So once your trade is complete, you should withdraw your coins to your own wallet.

The Binance withdrawal fees are 0.0005 BTC (almost $29). If we subtract that from 0.00086, we are left with only 0.00036 BTC (around $21). In contrast to Binance, ChangeNow allows you to enter your own wallet address during the swap process. Once it’s complete, the coins will be sent to that address. All fees are included in the rate shown on the site, so there are no additional withdrawal fees.

Personally, I find ChangeNOW a better option than Binance for such small amounts.   


Scenario #2

My goal was to see how much bitcoin I could get for 1 ether for the second test. Here are the results.

Binance

For 1 ETH on Binance, I could get 0.070055 BTC.



That amount is worth around $4.036.



ChangeNow

For 1 ETH on ChangeNOW, the site offered me 0.06870159 BTC.



When I converted that to USD, it came out to $3.960.



Which exchange is better for scenario #2?

With Binance, you get a much bigger share of bitcoin. 0.070055 BTC ($4.036) compared to only 0.06870159 BTC ($3.960) on ChangeNow. Looking at it in terms of USD, the difference is $76.

Once we subtract Binance’s withdrawal fee of 0.0005 BTC, we are left with 0.069555 BTC. That is still more than what you would get on ChangeNow. Therefore, the winner in this category is Binance.   


Scenario #3

I wanted to see the difference between the two exchanges for a significantly higher amount for the third and final test. This time, I would be buying bitcoin for 50 ether. Here are the results:

Binance

Binance could have given me 3.51135 BTC for 50 ETH.



When we convert that amount into USD, that’s approximately $204.300.



ChangeNow

I could have gotten 3.4095245 BTC for 50 ETH if I had performed the swap on ChangeNow.



In terms of USD value, that’s around $198.400.



Which exchange is better for scenario #2?

It’s pretty clear who is the winner in this category. On Binance, the offer was 3.51135 BTC, while ChangeNow had an estimate of only 3.4095245 BTC. Even after we consider the Binance withdrawal fee of 0.0005 BTC, we are left with 3.51085 BTC compared to 3.4095245 BTC on ChangeNow.


Observations

• Most of the time, it's not worth using instant exchanges.
• Instant swap platforms have a significant advantage over traditional exchanges only for small trades (probably $100 worth of crypto and less).
• The bigger the trade is, the less favorable are the rates on an instant exchange.
• Instant exchanges could also offer certain benefits when swapping two assets that don’t have a trading pair on a regular exchange. For example, if you have Cardano and you want to purchase Stellar with it. Such a trading pair probably doesn’t exist on CEXs/DEXs, but it does on instant exchanges. To get Stellar on a CEX, you would probably have to convert Cardano to a stablecoin or to ETH or BTC. After that, a second trade needs to be carried out to swap the new asset to Stellar.
• When doing the tests, I didn't take into account maker and taker trading fees, assuming that Binance already includes those in the final estimates. Even if they don’t, those fees are relatively insignificant and amount to 0.1% max.

Please Note:

• This is not a sponsored article.
• This is not an advertisement of any exchange or trading platform.
• My recommendations are to stay away from instant exchanges because they have proven themselves to be untrustworthy numerous times in the past
• Do your own research and don’t take my word for it.