Ultimate Business Revenue Model of Binance

ByAbigail

The largest cryptocurrency exchange platform in terms of volume is called Binance. The Binance business model mixes digital technology and banking, allowing users to exchange cryptocurrencies and other digital assets on the Binance platform. It focuses on altcoin trading, providing crypto-to-crypto trading on over 600 coins and virtual tokens. It has its own blockchain-based cryptocurrency, Binance Coin (BNB). Binance also provides other services such as assisting users with investment selections, automated fund transfers, and the ability to earn interest. Being the largest cryptocurrency exchange platform in the world, Binance has multiple streams to fetch profits.

 

I hope explaining the Binance revenue model would be difficult for us. Because, when compared to the early stages of Binance, there are many business derivatives and functions. There is also no official explanation for their monetization policy.

 

This is why we came up with the idea and conducted research on their revenue model to increase business growth.

 

At the start, there were just five primary business models. However, Binance currently earns money from a variety of income streams, including NFT, Derivatives, DEX, Institutional & VIP services, Cloud, Launchpad platforms, and Broker programs.

 

The key business concepts outlined in Binance’s whitepaper can be found here.

Binance’s Primary  Business Model

  • Exchange Fees: Binance will impose a fee of 0.2% on every trade/transaction that occurs within the exchange. This can be divided into many schemes like market-taker, volume-based tiering, and so on. 
  • Withdrawal Fees: When customers choose to withdraw funds from the platform, they must pay specific costs. It might be in the form of a fiat withdrawal from a bank or a crypto withdrawal from a hardware wallet.
  • Listing Fees: Binance exchange lists crypto coins and digital assets so that they can be traded for a charge. Fees may include an initial listing charge or revenue share on each transaction.
  • Margin Fees: Binance can advance you with a cryptocurrency for trade purposes. The exchange levies certain fees on borrowed funds.
  • Other Fees: When consumers do not have time to observe crypto fluctuations and trade, there is an option known as automatic algorithm trade. When users opt-in for this, a fee may be applied to each other. 
  • Mining Services: Binance opened two mining pools for Bitcoin and Ethereum in 2020. The mining pool charges Bitcoin users 2.5% and Ethereum users 0.5% in pool fees. This mining pool will help to generate revenue using this crypto exchange platform.
  • Spread: Spread is the difference in price between buying and selling a product, such as a token. Although there is no fee for purchasing or selling tokens, Binance profits from the spread of each transaction.
  • Interest on Loans: Binance offers its users to borrow cryptocurrency loans with interest. Users can use their crypto holdings as security during the loan period, which ranges from 7 to 180 days. Binance makes money by charging interest on its loans. The interest rate is determined by the loan amount, collateral pledged, payback time, and currency type.

 

Binance’s Advanced Business Model

  • VIP & Institutional Services: Binance has a specific program for large institutional investors and traders who undertake bulk deals. The platform provides particular benefits in terms of storage and custody choices for accessing their funds, which are different from the general exchange. Binance receives a part of the cost for providing custody and VIP privilege service.
  • Binance broker program: Binance grants permission to see their transaction history and use it on external third-party businesses. Other exchange businesses can use Binance liquidity to grow their operations via API, while Binance earns a commission on every trade that occurs.
  • White-label Binance Cloud: Binance cloud is a white-label solution provided by Binance that allows entrepreneurs to get started in the crypto exchange sector. For operational exchanges, the complete technical infrastructure is supplied. Binance charges a fee to back up the exchanges technically.
  • Launch of Token: Binance, like other cryptocurrency exchanges, hosts token sales through a specific launchpad platform. The advantages include project assistance, support, and access to Binance liquidity. Tokens are listed on launchpad for a regular fee paid to Binance.
  • Binance Decentralized Exchange (DEX): Binance is well-known for its hybridity. It runs a synchronous decentralized exchange and collects gas fees for implementing the smart contract deal.

 

Analysis of the Entire Binance Model

Below, given a detailed analysis of the Binance crypto exchange:

Strength of the Binance:

  • A Wide spectrum of cryptocurrencies: Binance users can purchase, sell, and hold over 600 cryptocurrencies.
  • Binance Academy: Binance website provides cryptocurrency beginners with tutorials. As a result, it attracts new users.
  • Market Leader: Binance is definitely the market leader in the cryptocurrency space in terms of ratings and trading volume. This increases brand recognition.
  • Strong Security: Binance provides users with a robust defence against hackers.

 

Opportunities available in Binance

  • Increases Assurance: More individuals are realizing that cryptocurrency is not a fraud. As a result, more people will be eager to invest in the cryptocurrency market.
  • Adoption rate increases: As more nations recognize cryptocurrency as legal tender, Binance will have numerous options to expand its global reach.

 

Widing Up

Hopefully, you have a general idea of how Binance gets money through various income streams (still some business models are not explained here).

When everyone is concerned about the ups and downs of cryptocurrency, businesses are just thinking about the business potential. Similarly, if you want to establish your own crypto exchange without the help of a third party, utilize a Binance clone script that is widely available.

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