January 29, 2023

Binance’s Business Model Seems Sound And Reliable

The crypto community did not receive the news about CEX platforms letting go of staffers lightly. For many, the effort from these companies to become leaner and more efficient by cutting down costs related to the workforce seemed worrisome and indicative of some corporate shenanigans that were happening behind closed doors.

The truth is somewhere in the middle. While some companies are doing what they can to reduce expenses because they were overly ambitious and cumbersome, other companies simply focus on efficiency.

Changpeng Zhao calms everyone down

Binance is the biggest crypto exchange in the world. Unlike other similar businesses, the company is quite transparent with its business practices and even hired an additional auditor to prove that it is solvent and has enough liquidity to cover any products that they are releasing to the market.

At the same time, the business model is not focused on selling investment packages. 90% of the revenue generated by the company comes from fees that retail traders pay when engaging with the market.

The 2021 total revenue number was close to $20 billion meaning that over $18 billion is what was generated through fees and commissions.

The secret is in volume. With its leading position in the market and global reach, Binance certainly does not experience any shortages in terms of clientele.

People come to the exchange in droves. Zhao added that they could using ads on CoinMarketCap which Binance acquired two years ago to generate $20 more million, but the company does not feel that it will improve user experience and may even create some issues.

Binance proves that it can be profitable without cutting corners

Even Binance regularly combs its ranks to reveal poorly performing staffers. Other platforms may focus on reducing their staff and implementing money-saving mechanics like automated support systems, but Binance can afford to avoid all these issues.

This company is a good example of a business run well with appropriately focused efforts. The revelation was published on YouTube where Zhao was interviewed by TechCrunch.

It also comes at the right time, as the crypt industry is trying to shake off the fallout of the FTX debacle.