An analysis of the market capitalization and virtual valuation of top cryptocurrency exchanges.
Have you ever wondered about the true value of your favorite cryptocurrency exchange?
Most crypto platforms operate as private entities, meaning they are not publicly traded. However, there is one notable exception: Coinbase, whose valuation is publicly disclosed.
This raises an intriguing question: can the valuations of other exchanges be inferred by comparing them to Coinbase, given its known market worth?
For the first time, an in-depth analysis explores this compelling topic, employing precise arithmetic evaluations and comprehensive estimates that consider both tangible assets and intangible factors.
Disclaimer: This article explores a potential approach for estimating the virtual capitalizations of cryptocurrency exchanges. While the analysis relies on verified data, including Coinbase’s metrics, it also incorporates comparisons with non-public exchanges and involves substantial market speculation. As a result, the calculated valuations should not be interpreted as the actual market capitalization or value of these exchanges.
Note: The data presented below, along with the methodology underlying the Exchanges’ Trust and Value Index, is accurate as of November 20, 2024.
Virtual Capitalisation as the Lead Metric
As of November 20, 2024, Coinbase’s market capitalization stood at $81.26 billion.
Florence Muchai from Сryptopolitan introduced a method for calculating a metric, tentatively termed the "Virtual Capitalization" of cryptocurrency exchanges. This approach involves analyzing ratios of core metrics that best reflect an exchange's net worth in comparison to Coinbase:
Average daily trading volume
Web traffic
User count
Market capitalization of the exchange's native token
To apply the formula, the research examines seven popular cryptocurrency exchanges, each varying in size and potential value.
Binance
Bybit
OKX
Kraken
WhiteBIT
Gate.io
Based on data and information sourced from CoinGlass, SimilarWeb, and official statements from the exchanges, the following statistics have been compiled:
The valuation of each exchange is calculated individually using a single metric, with the goal of determining an estimated range.
The final calculations yield the following results:
Exchanges’ Trust and Value Index
While arithmetic metrics provide a foundation for estimating an exchange's virtual worth, the true essence lies in its trust and value.
To deliver a more comprehensive assessment of exchanges' market positions, the Exchanges’ Trust and Value Index has been introduced.
This analytical framework is designed to evaluate both the financial health and trustworthiness of an exchange. The methodology employs a numerical scale ranging from 1 to 10, with 10 representing the highest score and 1 the lowest.
The index is based on six core metrics: transparency, activity, capital, security, compliance, and proof of reserves.
The Transparency metric in the "Exchanges' Value and Trust Index" assesses how openly an exchange operates, particularly in disclosing information about its financial status, operations, and decision-making processes.
Activity measures the organic traffic and user base of a cryptocurrency exchange, offering insights into its operational performance. This metric is derived from self-reported audience data and web traffic statistics.
The Capital metric evaluates an exchange's financial strength and liquidity. It considers factors such as total trading volume and futures trading open interest (OI).
Security measures the extent to which a cryptocurrency exchange safeguards user funds, data, and platform integrity. This is analyzed through anti-money laundering (AML) compliance, adherence to the Cryptocurrency Security Standard (CCSS), history of security incidents, and the custody of assets.
Compliance assesses how well a cryptocurrency exchange adheres to legal and regulatory standards. This metric evaluates the legality of operations, adherence to sanctions compliance, and integration with Financial Action Task Force (FATF) frameworks.
Results:
When analyzing cryptocurrency exchanges through the lens of the Index, notable distinctions become evident.
In terms of transparency, platforms like Binance, Coinbase, and Kraken openly disclose their top management and provide proof of reserves, while others, such as OKX, ensure transparency through third-party audits or strategic partnerships.
For activity, Binance stands out with over 200 million active users and substantial web traffic. Coinbase follows with 73 million users, while Bybit, with 10 million, lags behind. WhiteBIT, although smaller in scale, reports a respectable 5 million users.
The capital held and traded across these platforms also shows significant variation. Daily trading volumes for Coinbase ($6 billion), OKX ($5.4 billion), and WhiteBIT ($5.1 billion) are almost identical. However, Binance leads with $31 billion, followed by Bybit at $7 billion.
Compliance is another critical area where exchanges differ. OKX, Coinbase, and Bybit adhere to FATF guidelines, with Coinbase standing out for its rigorous compliance with U.S. regulations.
Regarding proof of reserves, WhiteBIT relies on third-party audits while keeping its reserves private. In contrast, Binance, OKX, and others provide public transparency. Bybit, Kraken, and Coinbase offer personalized access to their reserves, balancing transparency with tailored security measures.
What the Exchanges’ Trust and Value Index Means for Crypto Exchange Valuations
The results of the Exchanges’ Trust and Value Index reveal that the value of a cryptocurrency exchange extends far beyond simple ratio-based calculations.
Trust is as crucial as liquidity in determining an exchange's worth. This index provides a framework for quantifying not only the financial metrics of an exchange but also its long-term viability and the confidence it inspires in users.
Ultimately, the true essence of an exchange’s value isn’t found solely in the numbers. It lies in its ability to sustain success—or withstand failure—over time, reflecting both its current standing and its future potential.
