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Keeper of the Coin: What Crypto Exchange is King?

Crypto: the king of crypto exchanges

The last three years have been a boom era for the burgeoning crypto and web3 industry, which has seen unprecedented amounts of VC money rush into the space.

But even after a big 2020 and 2021 for crypto, HODLers are feeling down on their luck — and that’s because major cryptos are down more than 50%.

But with every boom and bust comes a new cycle of building, growth, and adoption. After crypto’s fourth turning, it’s extremely hard to ignore all the growth that the industry has seen.

One of the best ways to surmise all that growth is the sheer number of places you can stack sats, ETH, or your favorite cryptocurrency. There are now dozens of crypto exchanges, and legacy players are getting in on the action too.

That means that — if you’re a growing fintech, crypto, or web3 company — you have to support dozens of brokerages, wallets, centralized exchanges, and connections. And given the notoriously open-border nature of crypto, there’s really no telling where you’ll have to meet your customers.

That’s why we’ve built a middle-ground to ingest, interpret, and serve data from financial accounts. The Front API helps lending services, crypto companies, social trading communities, banking solutions, tax companies, and advisors collect and make sense of financial information from clients.

Connect multiple Crypto assets from one API. Start Here. 

Offering emerging fintech and finserv businesses these kinds of reliable solutions is our core mission. As we serve that information to firms building more informed and intelligent financial products, we have gained a lot of data on financial accounts connected through Front API which we can generalize, curate, and share insights about. We call it FrontIQ.

For the last few months, we’ve been observing centralized crypto exchanges — the place where people are going to buy their crypto. We’ve quantified the impact of some of the industry’s leading crypto platforms (and sized them up against their decentralized alternatives.)

Let’s dive into the research itself, starting with the value of assets connected:

High-Level Findings

  • 1. The balances below are sorted in terms of average balance per user. These balances also only consider centralized exchanges (CEXes.)
  • 2. The CEX with the highest balancer per user was Kraken, which had $15,750 on average among a hundred accounts ingested via Front API.
  • 3. Robinhood and Coinbase vied for the #1 spot in our crypto exchange leaderboard in terms of users, with a steep drop-off after the two — a sign that a CEX ‘duopoly’ has formed in the U.S. among these two leaders.
  • 4. The average balance per user reported in Front API was lower than publicly-addressed figures reported by some CEXes, which can largely be ascribed to falling crypto valuations.

Another important consideration is that many users connecting in Front API are fintech natives, users with two or more brokerage accounts who skew younger and generally have lower balances.

Major crypto exchanges in America

Methodology

We have sampled a subset of about 10,000 active users in the Front API.

Many of these connections come directly from the Front app, a consumer trading app which we created in the early days of our business which allows users to connect all of their brokerage and crypto accounts in a single place. However, it also includes generalized data from our dozens of B2B clients.

In many cases, users have connected more than a single broker to the Front API. So while we will generalize our findings, take the dollar averages with a grain of salt.

Another consideration that weighs heavily in that disconnect is that many users connecting in Front API are fintech natives, users with two or more brokerage accounts who skew younger and generally have lower balances because of a lack of savings.

Conclusions

There are plenty of conclusions you can draw from Front API data. Just at a glance, there’s two glaring conclusions on our end:

  • 1. Robinhood and Coinbase have a strong grasp on crypto traders in our dataset.
  • 2. Kraken’s average balance is considerably higher than competing services.

Let’s dive into some of the conclusions from our sample, as well as our entire API dataset.

Many Wallets, Services, and Exchanges Makes Crypto A Very Siloed Industry

The Front API is currently tracking 42 crypto connections — including centralized exchanges such as Coinbase, broker-dealers offering crypto services such as Public, public addresses on blockchains, and Wallets like Metamask.

In terms of users, there is a wide spread between the number of users on major centralized exchanges such as Coinbase and Robinhood and users on other CEXes or decentralized alternatives.

This results in larger spreads in average balance, which makes it hard to generalize data from some of the lesser-used products.

The siloed state of crypto is also a huge opportunity — the sheer number of products speaks to the entrepreneurial and emergent nature of the crypto space and demonstrates that there are less restrictions to building a product that users will actually adopt and use.

Better yet, building solutions which speak to this siloization represents a massive opportunity to connect users with their finances.

Robinhood and Coinbase: The Duopoly for American Crypto?

Out of the 42 crypto exchanges which users are actively using in Front API, two stand out: Robinhood and Coinbase.

It’s obvious why — they stand heads and toes above their peers in terms of active users and total assets. Coinbase comes out ahead by a small margin in terms of unique users, but isn’t far off on average balance basis.

That’s not to say that other products aren’t competitive, but in terms of scale, Robinhood and Coinbase have already cemented themselves as two of the most visible names in crypto. They are not just publicly-traded fintechs, but some of the most-used products in the centralized crypto space.

Both companies’ exchanges are also trying to establish a stronger presence on the decentralized side of crypto with their own self-custody Wallet products. Robinhood has been testing its own crypto wallet for months, while Coinbase Wallet is already widely available.

The CeFi vs. DeFi Showdown: Who’s Leading?

In an effort to focus on the Centralized Finance (CeFi) side of crypto, we left Decentralized Finance (DeFi) products such as Wallets or Blockchain Addresses for a separate article. However, it’s hard to have a discussion about CeFi without confronting DeFi.

At face, our dataset suggests that use of major CeFi exchanges in the U.S. has largely consolidated in Robinhood and Coinbase. By comparison, though, there are many wallets connected in the Front API — Alpha Wallet, Atomic Wallet, Coinbase Wallet, MyEtherWallet, Metamask, and TrustWallet are just a handful of names which had active connections in Front API.

And there are many direct-address links as well, with the majority being for Bitcoin, Ethereum, Binance Smart Chain, Solana, and Polygon.

It’s hard to generalize these direct address or Wallet connections in a comparable way to centralized platforms such as CEXes or CeDeFi products. However, we’ll explore the complicated and intermingling worlds of DeFi and CeFi in a separate article.

Enable clients to transfer crypto coins and tokens through our API. Get in Touch Today. 

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