Publicly Funded Crypto Exchanges Are Better Quality According to New Report

Colin Muller

CryptoCompare have found that cryptoasset exchanges that seek external funding, rank generally higher across a number of metrics than exchanges that raise private funding.

This discovery is found in the new CryptoCompare Exchange Benchmarking Report which broadly evaluates cryptoasset exchanges across seven metrics, and over a timeframe of observation of several months.

CryptoCompare found that the highest rated exchanges (“AA”) were entirely externally funded, whereas the worse-rated exchanges secured progressively more private funding as the ratings dropped. Here, private funding seems to be an indicator of poor quality.

funding per grade(source: CryptoCompare)

A further complication to the findings, however, show that when using the ICO funding model (an external funding model) to invest in exchanges, there was a mixed bag of quality of evaluated exchanges. Exchange ICOs were thus distributed across all quality ratings of exchanges.

Essentially, this means that just about every exchange tries to do an ICO - at least to cover part of the investment requirement - no matter how good or bad their platform is. Thus, we should focus on how much is raised during any given exchange ICO (inevitably taking the form of a proprietary exchange token offering trading discounts).

funding w/ ico per grade(source: CryptoCompare)


One might look to a recent, prominent example to corroborate the findings here. One of the most important cryptoasset exchanges, Bitfinex, has recently concluded a public raise of $1 billion worth of the propriety LEO token.

Although often in the limelight for investigations and suspicions of imminent collapse, especially connected to sister enterprise Tether (USDT), Bitfinex is by many metrics a good exchange and rated well in CC’s ranking system: 14th out of 110 rated exchanges (the exchange ranked poorest in the “Legal” department).

cc ranking tops(source: CryptoCompare)

So, despite the sometimes invidious public persona of Bitfinex, they had little trouble raising the sum of $1 billion from external investors - and doing so no less under the threat of investigation by the New York Attorney General. This must necessarily reflect the fact that many users and investors large and small recognize Bitfinex’s other qualities as an exchange.

A perhaps even more prominent cryptoasset exchange, Binance, have shown just how far public funding can go with their BNB token. Originally issued almost two years ago during the summer of 2017, during Binance’s ICO, the token has grown to be one of the most successful investments of 2018, along with Binance’s general success - Binance is rated number 8 on CrpytoCompare’s list.