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We’ve got the latest Exchange Benchmark Report from CryptoCompare. Keep reading to find out if your favorite exchange is rated ‘top-tier’ and what it takes to reach the top spot.
Exchanges are held to very high standards by their users, they must gain trust and consistently provide exceptional service. Users on the exchanges are not the only people with whom they must maintain trust. Regulatory standards are seemingly making their way out of the gray area and gradually into clarity. This has ultimately helped exchanges and their respective users progress alongside crypto projects without hastiness.
In response to this rapid growth and developments in regulations, organizations have formed to work within the community towards uniform standards and expectations. This helps exchanges provide secure and legitimate services to crypto companies and investors in the community alike. Before we jump to the results – it is important to understand the who, what, and why that led to the exchanges’ score.
‘The Who’ – Meet The Organizations Who Analyze, Provide and Regulate Exchanges:
The Exchange Benchmark Report is delivered by CryptoCompare, which provides real-time data analysis of basically any data metric you would like to see from various blockchains as well as exchanges. Its website has an array of tools at its disposal to help keep you up to date on the market. CryptoCompare collabs with a handful of organizations that are also pioneering the crypto movement in security and implementation of regulatory standards.
‘The How’ – Metrics Used For The Ranking Score of Each Exchange
There are eight major categories that were analyzed to get the rankings of over 150+ exchanges that were ‘tested’. Each of these categories carries a certain amount of weight. CryptoCompare uses a very robust process in compiling the data for this report, as they explain a bit of their process below–
“We combine over 80 qualitative and quantitative metrics to assign a
grade to 150 active spot exchanges. Each metric is converted into a
series of points based on clearly defined criteria. Metrics were
categorised into several buckets (see p.16) and distributed fairly to arrive
at a final robust score, ensuring that no one metric overly influences the
overall exchange ranking.”
CryptoCompare Exchange Benchmark Report April 2022
In the chart below we can see the emphasis on the market quality, legal/regulation, and security categories. There is not too much variation in weightings throughout the eight categories which shows the due diligence in data research to be sure that no one category outweighs the other. CryptoCompare uses a ‘checks and balances’ style test if you will. This develops trust and validity in the data.
As mentioned at the beginning of the article regulatory issues that are gradually gaining clarity are moving into a stage of compliance and enforcement. Thus placing transparency and regulatory compliance at the top of the ‘grading scale’. Interestingly, the highest weighted component of the rankings at 20% of the score is Market Quality. This may sound strange at first glance, but the importance of an exchange having the correct values at the correct time, being that the crypto market is a highly volatile one, makes sense. The data used to rank the exchange is derived from the numbers extracted from that exchange. It all starts with the numbers, thus making the correctness of that data most important.
Before we take a look at the top-tier exchanges, let’s quickly clarify when, where, and how the data for the market quality component were derived. In the chart below CryptoCompare displays the sources that were used to collect the data as well as the time periods that trades and order books were studied:
Our next point of focus will be on the ‘Top-Tier’ rated exchanges. CryptoCompare took each exchange with a B score and higher and placed them into a separate category that is safe to deem lower-risk for the investor based on the data collected.
Throughout the Benchmark report, it is noted that the grading scale was slightly adjusted in response to regulatory changes. The grading scale slid up, meaning that fewer exchanges would be eligible for the Top-Tier classification; this was done so to encourage the adoption of security, transparency, and regulatory standards.
As the graphic below shows, 78 out of 150+ exchanges still made the cut for being Top-Tier, which is comforting for investors. It is also noteworthy that 91% of total volumes came from Top-Tier rated exchanges. It appears that as the crypto market becomes more widely adopted, larger exchanges are used. The larger exchanges tend to be more safe, naturally, and thus more trustworthy.
And now, the part we’ve all been waiting for, below is the chart from the CryptoCompare Benchmark Report from April 2022 ranking the top crypto exchanges—
Let’s focus on the top four exchanges in the list, as the top four each received the highest, AA grade.
It is no surprise that Coinbase made it to the top of this list. They are well-established and are known for their user-friendly interface, a wide selection of listings, and ultra-secure platform. Coinbase is also a hub of information for beginners, offering guides or tutorials for just about anything you would like to learn and you can earn crypto in doing so. They also offer insightful perspectives in their news updates for more seasoned investors. Coinbase has a cavalry of products, including a unique private client feature for family/business trusts, the ability to lend on the exchange, and crypto cards that earn rewards. A payroll feature for employers that payout in your choice of crypto or USD with zero fees. They even have their own Coinbase USD token. Coinbase offers advanced trading and even a separate Coinbase Pro application. They offer business solutions that allow you to list your own assets on the exchange as well as institutional-grade offline storage and crypto intelligence feature that tracks transactions to help keep you compliant. There is also a Coinbase ventures program that offers to fund start-ups that build on the open network – this project has already funded many successful crypto projects. Coinbase is the trusted exchange that you can use as a beginner, and continue to use for years to come.
To learn more about Coinbase we have a full review of the exchange right here.
Gemini is another security-focused exchange, their website states a ‘four pillars’ business model; product, security, licensing, and compliance. This is stated with intention as they have been recognized for their security. Let’s not overlook the first pillar, product – Gemini offers an extensive list of products. They offer crypto credit cards, mobile and web exchange, Gemini Earn (staking), Custody feature (institutional-grade crypto storage), a wallet, Gemini pay (for US citizens), Gemini Active Trader (an advanced exchange for pros). A unique feature is Gemini Clearing where they act as a third party and allow two people to settle off of the exchange. And did we forget to mention their native stable coin the Gemini Dollar (GUSD)?
And it would be a shame not to give props to their educational resources – if you haven’t seen Gemini’s Cryptopedia, it is definitely worth checking out. We also have a full review of the Gemini exchange here.
Bitstamp is one of the oldest established exchanges around. The UK-based exchange has put in its time. Tried and true their reputation for being reliable and secure – well, speaks for itself. Excellent for beginners, due to the ability to onboard with fiat, keeping things simple for the retail investor. They aren’t simply an onboarding platform for first-time crypto buyers, their products include advanced trading options with a variety of APIs that allows users to set up their own trading environment. Bitstamp even has a crypto-as-a-service feature that allows financial institutions among other businesses to integrate the exchange services into their own apps and even leverage trading to build business models.
An incredibly impressive project that Bitstamp executed and delivered in a wonderful report, Crypto Pulse – includes research and data that is a truly selfless gift to the crypto community. Below are a few images from their research whose purpose was to get an honest understanding of the perceptions of the crypto industry as a whole and how to help it grow with mass adoption. Kudos to you Bitstamp for rolling up your sleeves and finding real-life answers to questions that could not be answered within the crypto community.
For more information about Bitstamp – you guessed it, we’ve got an in-depth review right here.
Binance comes in at number four, last on the Top-Tier list, but certainly not least. Binance is an absolute powerhouse of an exchange. Binance did not stop at a native coin but a vast Blockchain that is EVM compatible. Start at the core of their blockchain with the exchange native BEP-2 token standard which stores tokens on-chain for use in the exchange originally intended to pay Binance chain’s version of gas fees. They also made a BEP-8 mini token standard that is self-listed under a BEP-20 and can only be listed against Binance US Dollar (BUSD). The mini token helps alleviate the costs of transactions that are smaller and use less computing power as it does not require validators because the tokens are self-listed. Then, along comes BNB, which is Binance’s native token that is stored on the Binance-chain for fees similar to BEP-2, except it branched out to be utilized on a multitude of other platforms as well. Binance has been quite successful with its native token, you will see BNB close to the top of Market Cap charts regularly. Binance exchange offers a wide range of coins, tokens, and NFTs. They also offer a variety of alternative investment options, a rewarding Learn and Earn feature, fiat purchases, and a wallet. Binance has successfully built a one-stop shop for all of your crypto needs. And of course, if you’d like to see an in-depth review of Binance, check out this link.