Topic: Is User Base the Biggest Factor in CEXs Growth? (Read 205 times)

I don't think that this is quite accurate. Yeah, people were using bitmex a lot as they had pretty fast site, it was reliable, ridiculously high leverage, and enough liquidity for whales. And extraoridinary thing at the time was the fact that it never got hacked like most cexes from that time.

And yes, people stopped using that site after they made clear that they are going to enforce KYC, as if they had continued to use it, they would need to reveal their past transactions to officials. And many people weren't prepared for that. What people didn't seem to get that this would be new standard in every legit site that followed regulations.

Some of these exchanges without kyc might survive under the radar, but higher the volume is, more pressure they are going to get. Especially when they are been used to launder stolen crypto like bitmex.

Yobit should be top exchange if KYC was major factor, as they still haven't enforced kyc. It never got hacked and has existed for ages now. It's insanely shady, customer support is horrible and it has "criminal operation" written all over it. But somehow they are still running .

But i would say that trust from the whales, fast site with good liquidity, fast orderbooks, no downtime and clear gui and overall trust, are things what are biggest factors in growth.

Volume is a factor that i wouldn't count in, as exchanges have gamed with that even publicly, by creating trading volume competitions. And this is on top of fake volume they create.

Clients need to feel like they are cared for so any cex that would have unique features that give bonuses to their clients would definitely have a high chance of growth. Most clients will look for those cex that can provide what they need and more. It will be your cutting edge against other cex. Of course you need to find the line between giving bonuses and not losing money in the process.

I think wih mandatory KYC common accros most top exchanges; easy process of getting kyced should be another factor as pointed out but I still feel early listing of potential project has been an obvious reason for growth particularly if you closely monitor Bitget. Their spot trading volume saw more than 200% increase from Feb - March in the Coingecko Q1 report. They have recently been on the spotlight for early listing and users are more inclined to platforms that provide profit opportunities.

Their generosity. 
So, aside from being not strict with KYC implementations, the airdrops that they're doing through launchpools or launchpads are the ones that are making them more popular. The more money they distribute to their bigger distributors and depositors, that's how they're showing generosity to the users that are loyal to them and have trusted them with their funds.

Many factors,
New exchanges: Friendly KYC rules, list a lot coins, low fees, promotions.
Old exchanges: Claim to have insurance or anything that makes people think your exchanges is the safest place.

They forced all users to undergo KYC verification since 2023, the level 1 KYC need to submit either ID card, passport, driver's license, and proof of residence.

If you say launchpool is a significant factor of their growth, what about Binance, Bybit, OKX, Kucoin, HTX etc that also have launchpool? they're same.

You're right, events like Launchpools & PoolX are indeed a significant factor in Bitget's growth. However, I'd argue that compliance with regulations and policies, as well as listing high-quality alts early, are also crucial reasons. That's why this report ranked them as the CEX with the highest trading spot volume in Q1.

It suerly is but the users should be organic. Exchanges can attract a lot of users just by distributing $5 each but these users that comes for $5 probably won't again trade on the exchange. User base surely is a metric but the stat that decides which exchange is more popular or is a large one is it's transaction volume. The transaction volume also roughly gives the profit of the exchange. But there's no universal API to get that data and the transaction are reported by the exchanges themselves, so a scam exchange are likely to inflate their data.
Among the top centralized exchanges, binance seem to lead on volume by a big margin followed by Bybit, Upbit, Gate.io, OKX, Bitget, HTX, Coinbase, MEXC, Lbank in Top 10.

Events also play a role, I agree, but the bigger one is the KYC requirement even now. When Bitmex started enforcing KYC verification. Bybit was still not strict with theirs, thus that why the volumes increased there. They would later become strict and people started looking for alternatives like OKX, MEXC, Bitget and Bingx at that time.

Certain exchanges just ask for ID and a video selfie while others will ask for your bank statement, what your job is, how much you earn per annum etc. Which exchange do you think the users will prefer? 

It's easy to validate these type of accusations about fake bot trading activities when there's no corresponding growth for the cex. But in the case of bitget for instance, I think they shown growth in all areas. From Twitter followers, to daily volume, I've followed their progress and seen impressive statistical increases across board

For the CEX to have the user base, they would have/do other things that attract such users. And that is what propels the CEX growth by increasing user base.

Factors that matter are things like user experience. If Binance user experience was not good, many traders and people wouldn’t want to use it. They even went as far as having a view for novice users so you don’t see too much cluster and get confused.
Marketing is another factor. Binance for example has really done well with their marketing. Even till date they haven’t stopped. They have gone as far as partnering with Ronaldo, and many other Public figures, companies, etc.

There's a lot, but most of it would probably rely on how big and intense the marketing they do, especially with how there's a lot of competition in the business already. There's probably a group out there who would appreciate a not-so-strict KYC procedure, but at the same time, I reckon there's also a huge part who doesn't really give a crap about it and is mostly about how the reputation of the exchange is.

Other than those and the obvious stuff like security, trading volume, and the common features of an exchange, I believe there's nothing much else to it other than what I initially said, marketing. Regardless of how good a product this, it's not going to grow if the marketing it has is bad. It can grow given enough time, but a good marketing strategy can drastically reduce that timespan.

For me it's pretty simple a I would be looking at liquidity, number or trading pair and the UI because there are DEX which is not so user-friendly and some don't have liquidity as that's the main reason people prefer CEX as they have very interactive UI and high liquidity. Data shouldn't be compromised but unfortunately we cannot avoid Kyc while dealing with CEX

Obviously, it will always be multiple things altogether.

If we're talking about growth in terms of business, then it will obviously be trading volume(hence fee revenue).

What's wrong with bots? Traders use bots to automate trading processes all the time.

If you're referring to these exchanges using bots to fake volume, then that's another thing.

KYC is also mandatory on bybit. I think the main different was in the event created by the exchange sites. I was bybit users and i often particpated in the token splash along with almost one hundred thousands of people in bybit. The event is pretty much the same like airdrop by doing fast trade and i can get decent amounts of money.
I was not even found this kind of event on bitmex, which is lack of regular event. This is why the majority of people were moving their money from bitmex to the exchange site like bybit or binance which is regularly launched various event the helped us as users to generate more money through in safest way.
Bitget was also very often create big events like bybit and binance, its bitgetwallet is always working with the various new projects in order to increase their engagement to the users. Bitmex was rarely doing this.

I believe it's caused by lack of events on bitmex. it's not related to the KYC. People are seeing identity requirements are just a common thing these days. Only some people who against it. kind

Absolutely, trust and security are key for CEX growth. Offering diverse cryptocurrencies, improving user experience, and engaging with the community can also make a big difference. What other factors do you think contribute?

It’s not gonna be that surprising if an upcoming and start-up exchange tries to hold on to sponsors or other investors willing to give money to their project in exchange of the exchange giving credibility to some token or coin.

These days money can get you anywhere and no matter how much integrity you think an exchange has, if they need something done they will have no choice but to accept the money or bribe and just do whatever is best for the project. They can only do this a few times and not much because then it will bring destruction to their own exchange

I will never believe in such reports as CEX in the past are know to use bots to increase volume. The most important factor will always be security as it has been a concern with CEX. Although there have hacks in CEX in the past the current environment with such issue is stable as we haven't heard of any hacks for quite sometime now.

Since we are talking about traders I think one of the easiest things that makes a CEX stands out from the others are mostly the bonuses they offer and their charges. If you look at the trading volume on Bybit you will notice that it is the future/spot traders that actually uses it more because of their reduce fee charged on a trade.

 Also this same Bybit actually are one of the few exchanges that developers get their coins easily listed on it. They also provide higher leverages which is a key to perpetual traders. Lastly which makes binance standouts is the charges on moving coins from one wallet or exchange to another, couple with how easy users get verified on the exchange. Some exchanges take lots of time to get verified and this actually discourages some users

For me security remains at the top. You wouldn’t want an exchange to have issues with the security system and have hackers constantly trying to break your defenses before it actually does so.

Another thing that would attract more people and users is of course if you offer a diverse set of coins or tokens. The reason why lots of people use other exchanges is because the one they are using lacks that specific coin.

I think one of the biggest factors is how strict they are when it comes to KYC enforcement. Exchanges mostly grow big if the KYC requirements are relaxed. Remember Bitmex before KYC. It was so huge!
Once Bitmex started mandatory KYC verification, most of the derivatives trading volumes moved to Bybit as so on

I don't know much about Bitget's KYC requirements, but I believe it's one of the reasons the exchange has grown exponentially.

I remember reading through an article with a detailed report of the 2023 crypto industry and I was glued... I have to add that it was long though... I kept tabs with Coingecko's subsequent reports and I think the Q1 CEXs report which was released pre Bitcoin Halving came just in time and with some unexpected results!

The first quarter of 2024 saw a dynamic landscape in the cryptocurrency derivatives market but Binance maintained its dominant position in futures trading volume, holding a consistent share of around 43% throughout the quarter which I expected. OKX and Bybit followed closely behind, each capturing around 16% and 13% of the market share, respectively.

The twist for me was Bitget as it exhibited a notable uptick in its futures trading volume. While starting at 9% in February, the exchange saw a 3% increase to reach 12% by March. This growth coincided with an earlier report of a rise in Bitget's user base, expanding from 20 million to 25 million users during the same period.

On OI It was no surprise at this point seeing it surpassing OKX in March, propelling it to the third position behind Binance and Bybit.

Spot trading volume also witnessed a positive trend for Bitget, reaching over $95 billion by March. This growth allowed it to overtake competitors like Gate.io, HTX, and MEXC in the spot trading volume market.

Overall I believe, the first quarter of 2024 presented a mixed picture for the cryptocurrency derivatives market. While established players like Binance held their ground, Bitget emerged as a growing force, particularly in the spot and futures trading segments.

What other factors can propel a CEX growth?

Reference: https://www.coingecko.com/research/publications/2024-q1-crypto-report