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BlockFi Expands Product Stack Into Cryptocurrency Trading

BlockFi, a renowned centralized lending platform in the cryptocurrency industry, has announced the launch of its trading suite for customers in select regions. The trading platform is integrated into their overall stack for easy interaction with their other products in the lending and borrowing space, December 5, 2019.

Entering the Exchange Race

If there wasn’t already a competitive storm brewing between Coinbase and Binance U.S, it definitely will be now that BlockFi has announced their foray into trading.

In their public announcement, the company revealed that the platform would have nil trading fees and instant settlement, which are both big promises that look great on paper but are difficult to sustain. Fees, in particular, are most likely being kept artificially low in the short run to attract more customers. It serves as the primary source of revenue for an exchange, so it’s impossible they will have nil fees forever.

Trading of BTC and ETH will be allowed initially, as these are the two cryptocurrencies for which BlockFi already has all the necessary back end support. From a more realistic perspective, until and unless they match the variety of tokens that exists on Coinbase and Binance, they won’t be able to truly tap into the retail market.

BlockFi would be hoping their new venture will be aided by the unlocking of synergies from their lending/borrowing portfolio. In which case, they could see an influx of loans from large scale margin traders.

The Exchange Game is a Cash Cow

Many exchanges are competing for dominance in the United States market. From OGs like Coinbase to new age exchanges like Voyager, the exchange game seems to be ramping up big time, even on a global level.

The primary reason for this is the money involved. Two of the most profitable ventures in cryptocurrency are running an exchange and market making. Exchanges make far more money in the long term, and the birth of a brand gives them the added benefit of being able to leverage it in the future for other sources of revenue. This is evident from Binance and Coinbase both foraying into a variety of verticals from saving accounts to staking.

Take into account the influx of users during fresh cycles, and you have a business that scales revenue without even trying.

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Crypto Stats

CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin60,842 0.79 % 1.11 % 4.62 %
Ethereum2,384.4 0.43 % 1.32 % 15.21 %
Binance Coin517.61 0.17 % 0.67 % 14.72 %
Tether1.000 0.55 % 0.16 % 0.25 %
Polkadot43.88 0.58 % 0.43 % 36.39 %
Cardano1.390 0.34 % 1.98 % 15.63 %
XRP1.590 0.93 % 1.77 % 55.59 %
Uniswap35.60 0.42 % 1.27 % 20.57 %
Litecoin311.88 0.20 % 2.70 % 41.01 %
Chainlink41.04 0.19 % 0.59 % 29.75 %