A new report by Bankless Time has revealed that eight crypto exchanges account for 90% of the market’s liquidity. The report analyzed over 160 crypto exchanges based on various metrics, such as trading volume, web traffic, order book depth, and security.
An Oligopoly is in Charge of the Crypto Market
The report ranked the exchanges into four categories: AA, A, B, and C. The AA category represents the most trusted and liquid exchanges, while the C category represents the least trusted and liquid ones. The report found that only eight exchanges belong to the AA category, namely Binance, Coinbase, Kraken, Bitfinex, Bitstamp, Gemini, itBit, and Liquid.
These eight exchanges collectively have a total average daily volume of $1.58 billion, which represents 90% of the total market liquidity. The report also found that these exchanges have an average order book depth of $1.4 million for their top five trading pairs, which means that they can handle large trades without significant price slippage.
A similar finding was also reported by Kaiko, a smart data platform, which stated that 91.7% of the total market liquidity was concentrated among the eight largest centralized exchanges. Moreover, two of them held 58.5% of this liquidity. The situation was even more skewed when it came to the trading volume, as a single CEX dominated 64% of it.
The report also assessed the exchanges based on their web traffic and security. It found that the AA-rated exchanges have an average of 10.3 million monthly visits, which indicates a high level of user activity and engagement. The document also found that these exchanges have a high level of security, as none of them have experienced any major hacks in the last year.
The report concluded that the crypto market is highly concentrated and dominated by a few exchanges that offer high liquidity, trustworthiness, and user experience. Finally, it also suggested that users should be careful when choosing an exchange and consider various factors such as liquidity, fees, security, and reputation.
