2020 Spot Trading Annual Report

Jan 2021

TokenInsight Research [email protected]

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Industry Voice

The crypto contract market The exchanges-provided service is soaring in 2020, while should be high-quality, fast, and the contract provides an comprehensive, but the pursuit of indispensable hedging asset differentiation is going tools and liquidity for the astray. The "compliant" market is entire market. As the very restricted in terms of current trading volume of cryptocurrency listing and trading the cryptocurrency methods. The compliance and derivatives market has just legitimacy of the exchanges will begun, there is still a lot of be very important in the future. room for development in the trading volume and trading categories of the Haipo Yang entire derivatives industry. I believe that there will be Founder a 10 times breakthrough in the future. The next opportunity for the blockchain lies on its deep integration Yi He with the traditional industry, just like Co-founder & CMO the early Internet do. Everything can be work together with blockchain, and the points recorded in traditional A lot of money fow in Internet companies can be converted from traditional into points supported by blockchain technology to protect the interests of institutions, increased users and form a new spot and the funds contained in derivatives trading market. Because the industry. At present, of the integration with mainstream there are many market business, the conceptual boundary of makers doing hedging cryptos is broken. on different platforms, and it is hard for the Henry Wu plunge caused by the VP liquidity crisis on March 12 to reoccur. Although there is full of Thor Chan uncertainties in 2020, eventually, it’s still ran a bull CEO market under the ’s ‘halving’ law. 2021 will be a year which traditional capital and institutions continuously The regulatory trending joining the market, and Bitcoin is clear. There will will be more widely recognized be more mergers and then. acquisitions in Omar Chen 2022. Derivatives will surpass the spot, and the CEO ecosystems will become more plentiful. Spot, leverage, contracts, The competition of professional options, structured product capabilities and risk control fnancial products, fxed capabilities will occur within income products, rating exchanges. We can predict that the agencies, etc., will services of high-quality platforms become more attractive. will be improved in 2021, either in terms of contracts or spots. George Cao Alicia Founder Senior Partner tokeninsight.com 3 2021.01.20 [email protected] Wayne, TokenInsight COO TokenInsight Wayne, cryptocurrency investment products represented by Bitcoin have represented products investment cryptocurrency Through “edit”> "paste and match style" or use the shortcut key and match style" or use the shortcut “edit”> "paste Through to paste. “Shift+Option+Command+V" key and match style" or use the shortcut “edit”> "paste Through to paste. “Shift+Option+Command+V" key and match style" or use the shortcut “edit”> "paste Through paste. “Shift+Option+Command+V" to ① ② ③ Through “edit”> "paste and match style" or use the shortcut key the shortcut key style" or use "paste and match “edit”> Through to paste. “Shift+Option+Command+V" RESEARCH Compared with 2019, the cryptocurrency market has made great improvement in 2020. in improvement made great market has 2019, the cryptocurrency with Compared besides, due to the increase in trading volume, the revenue of trading platforms will of trading platforms in trading volume, the revenue besides, due to the increase fected in the price of the exchanges- which will eventually be re inevitably increase, also optimistic about its performance in 2021. 2021 will be a based token, so we are users and applications. Institutions with more year for the development of projects on projects, bull market must rely and the real cannot drive the bull market forever, impact by leveraging. bull’s investors, and spots, while derivatives will increase retail informations about the spot market in 2020, Please Enjoy the Report. For more Meanwhile, in the top exchanges such as , , OKEx, etc., spot trading Meanwhile, in the top exchanges such volume is no longer dominant. scale of exchanges-based token trading was a certain decline in the In 2020, there in the price and trading volume of the exchanges- the changes from volume. However, to the market position of based token, it can be found that the price is closely related have all achieved exchanges price of large the exchanges. The exchanges-based token’s to some extent, while for smaller exchanges, even in the bull market started an increase dropped and even weakly, still rose 2020Q4, the price of the platform from with the beginning of the year. compared trading volume of spot and derivatives will have substantial growth expect that the We and Bitcoin in 2021 is also very optimistic, The performance of in the future. role of supervision in protecting investors and promoting orderly market compliance will orderly promoting investors and of supervision in protecting role of the and improvement such as further development positive effects, bring more market in the future. cryptocurrency market in the rising stars in the cryptocurrency derivatives are DeFi and Undoubtedly, the volume of some decentralized quarter, of DeFi in the third 2020. After the outbreak with centralized exchanges. DeFi’s favorably exchanges (DEX) has been compared and it is than 0.01% to 1 % in just one year, less in spot has expanded from market share surprises to investors in more to DeFi bringing look forward still in rapid expansion. We 2021. the spot market in some indicators. In The derivatives market has even surpassed volume than the spot market. market has a higher trading 2020H2, the futures been further recognized by investors including those who came from traditional came from by investors including those who been further recognized of an example, the spot trading volume the spot market as markets. Taking total market value than 50% to $21 trillion, while the more by increased cryptocurrency total stock market value trillion in 2020, surpassing some countries’ once exceeded $1 by brought and New Zealand. The huge returns Australia, like , traditional from number of institutions attracted a large have products cryptocurrency as to include cryptocurrency crypto market, and they have begun markets to enter the part of their portfolio. on regulations have begun to implement relevant On the other hand, various countries the to cryptocurrency, of operating licenses related With the issuance cryptocurrency. out of the gray zone. Although the market has begun to move cryptocurrency impact on the market in the short term, the of supervision may have some introduction On the one hand,

Overview tokeninsight.comtokeninsight.com 4 5 6 7 8 24 18 20 Keywords Searching Analysis Searching Keywords Regulation Dynamics Exchanges Token Analysis Exchanges Token Users and Popularity Analysis User Source Interest Community and Search Trading Volume Dynamics on CEX Volume Trading Conclusion Trading Dynamics Exchanges Token and Price Volume Industry Update Industry Landscape Trading Dynamics Market Volume Executive Summary Executive RESEARCH

Content tokeninsight.com RESEARCH

In 2020, the spot trading volume of cryptocurrency exceeded $ 21 trillion US dollars, an increase of $21 53% compared with 2019. In Q4, due to the Executive infuence of the skyrocketing Bitcoin price, spot transaction continued to increase, the spot Summary trading volume and Bitcoin price illustrates a Trillion strong positive correlation (0.78).

Affected by the market crash 95% Weak March on March 12, March is the month with the highest spot DeFi began to rise in late The dominance of trading volume in 2020, June 2020. Trading the Bitcoin trading Highest which is $2,489B. volume of decentralized market has exchanges in 20H2 weakened in accounted for 95% of 2020. The annual the whole year. The spot bitcoin trading Binance ranked frst in spot annual trading volume of volume accounted trading volume with $1 some decentralized for 44% of the total trillion annually, and exchanges has been market spot, and the trading volume gap with compare favorably with only 31% in Q3. the second and third highest some high-ranking Top exchanges in 2020 is centralized exchanges. particularly widening.

1.71X Strict The whole-market spot In 2020, governments have paid $250B trading volume in 2020 is more attention on cryptocurrency 1.71 times that of market regulation. The compliance of In 2020, the overall spot trading derivatives, but the trading the cryptocurrency exchanges is volume of exchanges-based token volume of derivatives in the valued by government agencies such is about $250B, accounting for top3 exchanges far exceeds as the SEC. Hence, centralized 1.19% of the total spot trading that of spot trading. exchanges are paying more attention volume. to compliance.

Almost all users searching for mainstream exchanges, except those searching for ‘BitMax’, will fnd the keyword ‘Binance’. Some hot search words on exchanges also reveals the exchanges's possible customer acquisition direction. Taking large-scale exchanges as examples, Keywords Binance’s hot searched words include places such as ‘Argentina’ and ‘the United States’, while Huobi includes ‘Turkish’ and ‘Italian’ and OKEx has a large number of ‘Korean’ included in searches. tokeninsight.com 5 RESEARCH

INDUSTRY ① OKEx COO Andy Cheung resigned from OKEx and founded the blockchain consulting company BitWork. UPDATE ② Binance launches C2C trading function. ③ Loopring launched decentralized exchanges based on Ethereum ZK Rollup technology. ④ More information leaked in Mt.Gox liquidation: Bitcoin and BCH will be returned to debtors, while BSV and other cryptos will be sold. ⑤ Bitfnex launched Fulgur Alpha, a $280 millionQ1 cryptocurrency hedge fund.

① Binance announced the acquisition of CoinMarketCap for $400 million. ② Following BitMEX, Deribit stopped providing services to Japanese users. ③ Bitfnex applied for a subpoena to the U.S. court, seeking to recover the $850 million in customer funds that had been seized. ④ Huobi Global announced that the HT destruction cycle will remain "monthly". ⑤ Angelina Kwan, former COO of BitMEX, joined Deribit's investor board. ⑥ bitFlyer reported a net loss of $7 million in Q22019. ① KuCoin was hacked, and the private key of the hot wallet was leaked, resulting in the theft of $281m. The stolen funds were frozen by multiple platforms and $140 million was recovered. ② ZB experienced data anomalies in mid-September and was down for 48 hours. ③ announced that , a partner of American frm a16z, and Gokul Rajaram, an executive of Door , have joined Coinbase’s board of directors. ④ South ’s third-largest cryptocurrency exchanges, Coinbit, was seized and investigated by South Korean police for allegedly increasing trading volume and manipulating market prices. ⑤ OKCoin launched spot trading services on August 20 and launched the frst batch of spot trading pairs in 4 currenciesQ3 including BTC. ① Huobi Innovation Lab has established a 5 million USDT ‘Polkadot Ecosystem Support Fund’, which covers its technology, community, and content creation spending. ② Binance CEO Changpeng Zhao responded to the "Tai Chi" strategy to circumvent US regulation: it was not created by Binance employees. ③ Coinbase hired former Facebook executives as the head of investor relations. ④ Binance closed the station, which had only been in operation for eight months. ⑤ Heco, the Huobi ecosystem chain’s mainnet is offcially launched. ⑥ OSL is licensed by the Securities Regulatory Commission, offering BTC, ETH, and selected securitiesQ4 tokens trading. tokeninsight.com 6 RESEARCH

INDUSTRY LANDSCAPE

Spot Derivatives

DEX

tokeninsight.com 7 RESEARCH

1. Trading Volume Dynamics

TRADING Throughout 2020, TokenInsight studied and included more than 300 crypto spot exchanges. Due to the instability and questionable authenticity of data collected from some small exchanges, and also some exchanges show abnormal trading volume, the actual number of exchanges in this report is 295, including 279 Spot trading volume ‣ centralized exchanges and 16 decentralized exchanges, which is to conduct more in 2019 and 2020 comprehensive and accurate research on the industry. Source: TokenInsight Cryptocurrency spot market experienced turmoil in $21,083B 2020, the annual trading volume reaches $ 21 trillion, 2020 increasing 52.69% compared with 2019.

$13,807B In 2020, the total spot trading volume of reaches $21,083B, an 2019 increase of 52.69% compared with 2019 ($13,807B). The correlation between spot trading volume and Bitcoin price varies greatly with a correlation coeffcient of 0.02 $11,000B $22,000B throughout the year, a decrease of 0.76 from 2019 (0.78).

‣ 2020 annual spot trading volume and BTC price Source: TokenInsight

DailyVolume BTCPrice $140B $30,000

$112B $23,500 $84B $17,000 $56B $10,500 $28B

2020/1/1 2020/2/16 2020/4/2 2020/5/18 2020/7/3 2020/8/18 2020/10/3 2020/11/18 2020/12/31

In terms of spot trading volume, market trading volume are most active in 2020Q1. Whole market spot trading ‣ Under the infuence of the “black swan” on March 12, the quarterly trading volume volume in each quarter of reached $6,647B. In 2020Q3, due to a period of sideways in the Bitcoin price, 2020 market trading activity was relatively sluggish, and the quarterly trading volume Source: TokenInsight only reached $3,398B. At the same time, the rise of DeFi in 2020Q3 impacted the dominant position of Bitcoin spot on centralized exchanges. With the Bitcoin Q4 $4,998B $3,265B booming in 2020Q4, the trading volume in 2020Q4 rewarmed and reached $4,998B, a 25% increase compared to Q3 and a 53% year-on-year increase from Q3 $3,998B $4,550B the 2019Q4.

Q2 $5,441B The market crash on March 12 greatly affected the correlation between spot $4,351B trading volume and bitcoin prices. In 2020Q2, the spot trading volume and bitcoin prices showed a negative correlation (-0.17). However, since the 2020Q3, the Q1 $6,647B $1,641B strong Bitcoin price bulling trend has led to an increase in their correlation, which $3,500B $7,000B reached 0.61 and 0.78 in 2020Q3 and 2020Q4 respectively.

2020 2019 tokeninsight.com 8 RESEARCH

Spot trading volume is affected by Bitcoin price TRADING fuctuations, meanwhile, Bitcoin and Nasdaq Composite Index (^IXIC) maintain a strong positive 2020 Monthly Volume ‣ correlation (0.83) throughout the year. Ranking Source: TokenInsight In 2020, March is the most active month in the spot market, with monthly trading MonthlyVolume volume reaching $2,489B. In the other months, the trading volume in February,

$2,489.0B May and December all exceeded $2,000B. Bitcoin price volatility is one of the main factors driving the spot trading volume. In the months when the trading 2020Mar $2,451.0B volume exceeded $2,000B, the volatility of Bitcoin price volatility remained at a 2020Feb $2,382.9B high level, the standard deviation of Bitcoin price in December and March reached

2020May $2,096.9B $3,125B and $1,375B respectively. In addition, in June (standard deviation: $192B), the lowest volatility of Bitcoin in the whole year, the spot trading volume was just 2020Dec $2,017.8B $1,040B. 2020Apr $1,706.0B

2020Jan $1,700.2B The spot market showed a clear downward trend in trading volume in the frst three quarters. Months with higher spot trading volume were concentrated in the frst 2020Nov $1,509.6B half of the year, at the same time, the spot market in 2020 did not grow as much as 2020Aug $1,450.2B the derivatives market. The trading volume of the derivatives market maintained an 2020Sep $1,201.0B upward trend throughout the year, especially in 2020Q4. Funds gradually fow

2020Oct $1,040.1B from the spot market to the derivatives market in 2020.

$1,037.8B 2020June Meanwhile, the entry of institutions led to a strong increase in the price of Bitcoin 2020July in 2020Q4, and the market consensus on “BTC as digital gold” has increased. But $650B $1,300B $1,950B $2,600B for the whole year of 2020, the correlation between Bitcoin price and the Nasdaq Composite Index maintained a strong positive correlation (0.83), with a negative correlation between it and gold in 2020Q4, and the correlation coeffcient of Annual correlation coeffcient Bitcoin and gold for the whole year was just 0.52. Compared with gold, the price between Nasdaq composite of Bitcoin in 2020 still has a stronger correlation with the US stocks. index and BTC price: 0.83

Annual correlation coeffcient However, the correlation between spot and Nasdaq trading volume in 2020 is low between gold price and BTC (-0.007), and the inter-quarterly correlations are quite different, with both positive price: 0.52 and negative correlations appearing. In 2020, the correlation of liquidity between Annual correlation coeffcient the secondary market of US stocks and the overall secondary market of between Nasdaq trading cryptocurrency is lower. volume and spot trading volume:-0.007 ‣ 2020 spot trading volume of the whole market and BTC price Source: TokenInsight $30,000 $200B SpotVolume(R) BTCpriceindex(L) ^IXIC(L) ^IXICVolume(trend) GoldPrice(trend) $24,000 $150B

$18,000 $100B $12,000

$50B $6,000

2020/1/2 2020/2/19 2020/4/3 2020/5/20 2020/7/7 2020/8/20 2020/10/6 2020/11/192020/12/30 tokeninsight.com 9 RESEARCH

DeFi booms in 2020, driving the rise of trading TRADING volume on decentralized exchanges (DEX), and the proportion of spot trading on DEX continued to rise from 2020Q2. ‣ Proportion of DEX trading volume in 2020 The rise of DeFi in late June has become one of the biggest highlights of the industry in 2020. The volume of decentralized exchanges achieved a qualitative Source: TokenInsight leap in 2020. Meanwhile, the current decentralized exchanges is dominated by automated market makers (AMM) spot trading volume, and the proportion of decentralized spot trading volume in the annual has been broken up.

DEX In 2020H2, the proportion of trading volume on decentralized exchanges 0.52% increased from 0.2% of spot trading volume from centralized exchanges (CEX) on July 1 to 3% in mid-September, and remained above 1% for most of December. It is worth noting that, this proportion was only about 0.01% at the beginning of 2020. CEX 99.48% ‣ Proportion of spot trading volume on CEX and DEX in the second half of 2020 DEXVolumeProportion CEXtradingvolume Source: TokenInsight $140B 3%

2% $93B 2% $47B 1%

0% 1/1 2/9 3/20 4/28 6/6 7/15 8/23 10/1 11/9 12/18

‣ 2020 DEX spot trading DEX spot trading volume in 2020H2 is $90.6B, 17.6 times that of the frst half volume ($5.1B). The top DEXes represented by AMM has developed rapidly. After the Source: TokenInsight expansion 2020H2, the trading volume of some platforms such as V2 are comparable to that of centralized exchanges: Uniswap V2 has a total trading FirstHalf volume of $38B in the second half of 2020. The volume is ranked between Liquid 5% and Poloniex. Curve comes in second, with a trading volume of $18.6B, which is higher than .

‣ Comparison of trading volume between the top 5 DEXes and CEXes SecondHalf Source: Debank, TokenInsight 95% $60B $55.0B

$45B $38.0 $30.7 $30B $18.6B $15B $12.2B $7.2B $4.5 $4.2B

Liquid Uniswap V2 Poloniex Curve Gemini Sushiswap Tokenlon Balancer tokeninsight.com 10 RESEARCH

Bitcoin's annual trading volume reached $9,335B, TRADING accounting for 44.3% of the total spot trading volume. In 2020, its dominant position in the spot market has weakened.

In 2020, the annual trading volume of Bitcoin spot reached $9,335B, with the highest trading volume in the frst quarter, reaching $4,208B. The spot trading volume of Bitcoin in the third quarter was the lowest in the whole year, at only $1,256B. Although the strong increase in the price of bitcoin in 2020Q4 caused the spot trading volume to pick up, it was still slightly lower than the trading volume in the frst half of the year.

‣ 2020 BTC quarterly spot trading volume Source: TokenInsight $5,000B

$3,750B

$2,500B $4,208.3B

$1,250B $2,206.0B $1,255.5B $1,665.2B

Q1 Q2 Q3 Q4 From the perspective of the proportion of Bitcoin spot trading volume, the dominant position of the Bitcoin market declined in 2020. The proportion of Bitcoin spot trading volume decreased from 63.3% of the total market spot trading volume in the frst quarter to 33.3% in 2020Q4, and among them, the proportion of the second and third quarters declined the most, with 22.8% and 9.1% respectively.

‣ Bitcoin trading volume as a percentage of spot trading volume in 2020 Source: TokenInsight

63.3% 40.5% 31.4% 33.3%

Q1 Q2 Q3 Q4

On the one hand, the weakening of the dominance of the Bitcoin spot market can be attributed to the popularity of DeFi in the second half of 2020, some DeFi assets achieved excess returns and attract much more capital infow, especially in the third quarter. On the other hand, although the surge in 2020Q4 has slightly increased Bitcoin’s dominance in the spot market, this factor has a stronger impact on the contract market than the spot market, and the Bitcoin spot market has been impacted by the contract market to a certain extent.

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‣ 2020 CEX spot volume 2. Trading Volume Dynamics in CEXes and confidence interval Source: TokenInsight 2.1 Overview

$6,080B In 2020, the trading volume from centralized spot exchanges is $20 trillion, and the estimated fee

$10,134B income reached $1.8B. Confdence 30%

Throughout 2020, the spot trading volume from the market-wide centralized $14,188B Confdence 50% exchanges is reported to be $20,268B, an increase of 47% compared to 2019 ($13,786B). With calculating on the basis of an average fee of 3‱ and a real $20,268B volume of 30%, the fee income is estimated $1.824B. The increase in trading Confdence 70% volume is accompanied by the intensifcation of industry competition. Binance, the exchanges with the highest spot trading volume throughout the year, has a trading 1 22,000 volume of $965B, which is 1.881 times that of Huobi ($514B), which ranks second . Reported Volume

‣ Spot trading volume of ‣ 2020 annual spot trading volume ranking of centralized exchanges centralized exchanges Source: TokenInsight, *Activity such as transaction mining have a certain impact on the TI fake volume research model in each quarter of 2020

Source: TokenInsight Binance $964.52B $137

Change $16 HuobiGlobal $513.69B 2020 Q4 top 20 spot volume TotalVolume ‣ OKEx $433.35B $166 (unadjusted) Source: TokenInsight

$221 $7,000B BitZ $338.67B Binance $455.10B

Diginex $321.93B $77 HuobiGlobal $205.65B BitZ $169.44B $5,250B $285.37B $99 OKEx $139.76B 6,404 ZB 5,513 HitBTC $98.41B

4,621 $107 $3,500B HitBTC $219.16B CoinbasePro $89.06B 3,730 Diginex $75.43B CoinbasePro $199.16B ZB $75.27B $1,750B $41.59B $102.56B$2 Kraken Bitnex $32.48B Q1 Q2 Q3 Q4 $29.43B BitMax $77.21B$3 MXC $26.93B Liquid $17.97B Bitnex $69.09B$10 BitMax $17.42B $11.25B Bitstamp $65.87B$7 Poloniex Gate.io $8.12B

Liquid $55.01B$12 Kucoin $7.99B CoinEx $7.19B Poloniex $30.68B$3 BittrexGlobal $5.95B Gemini $4.73B Kucoin $28.72B$10 $200B $400B 1After adjustment based on TI's trading volume model. The Gate.io $22.80B$4 statistical scope only including the TI-adjustedvolume Gemini $12.25B exchanges covered by TI's trading unadjustedvolume volume monitoring. $240B $480B $720B $960B $1,200B tokeninsight.com 12 RESEARCH

‣ Exchanges with top10 spot trading volume quarter performance Source: TokenInsight

Q1 Q2 Q3 Q4 2020 Exchanges ($B) ($B) ($B) ($B) ($B)

Binance 141.58 151.08 270.73 401.12 964.52 ‣ Market share of top10 exchanges in spot Huobi 101.27 100.41 139.89 172.11 513.69 trading volume Source: TokenInsight OKEx 92.05 98.09 129.77 113.43 433.35 Others 84% BitZ 79.45 60.12 59.94 139.16 338.67

Digifinex 88.06 88.64 75.95 69.28 321.93 Spot ZB 87.60 92.13 43.71 61.92 285.37

Top10 HitBTC 57.44 46.89 49.85 64.97 219.16 16% CoinbasePro 29.32 27.39 53.39 89.06 199.16

‣ Exchanges with top3 Kraken 19.31 19.50 22.16 41.59 102.56 average quarterly growth in 2020 BitMax 16.45 27.85 15.02 17.89 77.21 Source: TokenInsight Total 712.54 712.10 860.41 1,170.56 3,455.61

Coinbase 52% In 2020, the top10 spot exchanges accounted for 16% of the market. Although

Binance 45% spot trading competition is ferce between exchanges, Binance, Huobi, and OKEx have maintained their trading volume in the top3 in each quarters. At the same Bitstamp 38% time, Binance and Kraken keep growing throughout the year. The exchanges with 30% 60% the highest average quarterly growth in 2020 are Coinbase, Binance and Bitstamp, with growth rates of 52%, 45% and 38% respectively.

‣ 2020 market share of key exchanges (in terms of trading volume) Source: TokenInsight

5% 4.76%

3% 2.53% 2.14% 1.67% 1.59% 2% 1.41% 1.08% 0.98% 0.51% 0.38%

ZB BitZ OKEx HitBTC Kraken BitMax Binance Diginex

HuobiGlobal CoinbasePro tokeninsight.com 13 RESEARCH

2.2 Performance of Key Exchanges

In the second half of 2020, the top3 exchanges (in terms of trading volume) presented a more stable competitive landscape, and key exchanges had a fxed daily trading volume ranking since 2020Q4.

In order to eliminate the interference of fake trading volume on data statistics and analyze the trading trends of the industry's main platforms, TokenInsight Research screened exchanges through the following measurement standards:

① The exchanges rank among the top 10 in annual turnover or the top 5 in average quarterly growth rate.

② The TokenInsight annual exchanges rating of the exchanges must be above B.

③ In the results of TokenInsight's volume monitoring, at least three out of the four quarters of the spot exchanges in 2020 have an average real trading volume higher than 80% and the real trading volume ratio has always been maintained at more than 60%.

④ This exchanges should have provided public APIs that can be used to trace back the transaction history.

Finally, 6 spot exchanges passed the screening, and these exchanges will be the focus of this quarterly report, including Binance, Huobi Global, OKEx, Coinbase Pro, Kraken, Bitstamp.

The quarterly spot trading volume of the aforementioned exchanges for the full year of 2020 is shown in the fgure below.

‣ 2020 spot trading volume performance of key exchanges (unadjusted volume) Source: TokenInsight

Binance Huobi OKEx Coinbase Kraken Bitstamp

$14,000M

$11,667M

$9,333M

$7,000M

$4,667M

$2,333M

1/1 2/3 3/7 4/9 5/12 6/14 7/23 8/25 9/28 10/31 12/3 12/31 tokeninsight.com 14 RESEARCH

From the daily trading volume of key exchanges, we can fnd that in 2020H1, the ‣ Proportion of key top3 exchanges (Binance, Huobi and OKEx) had ferce competition: the difference exchanges’ quarterly in trading volume between the three exchanges in January is small, and Huobi’s volume in 2020 spot trading volume in February surpassed Binance on multiple dates. Meanwhile, Source: TokenInsight the trading volume of the three exchanges in the frst quarter was much higher 19% than Coinbase, Kraken and Bitstamp. 5% 3% 30% 2% However, since the second quarter, Coinbase has narrowed the gap between its Q1 daily trading volume and the top three exchanges, and the market share of Coinbase among key exchanges has increased from 5% in the frst quarter to 9% in 42% 2020Q4. In the second half of the year, its surpassed OKEx and Huobi in several dates. While Binance began to widen the gap with Huobi and OKEx since the 32% second half of 2020. In 2020Q4, trading volume on Binance even exceeded the 7% 4% sum of Huobi and OKEx. 3% Q2 In conclusion, Binance, Huobi, and OKEx compete fercely in the frst half of 2020, 20% but Binance gave full play to its market position in the second half of 2020 and 35% seize a large market share. and exchanges which is holding British and American licenses such as Coinbase and Kraken was benefted from overseas 22% institutions entering the market in Q4, the trading volume on them grew rapidly, 7% catching up with OKEx and Huobi. In 2020H2, the competitive landscape was 3% 2% 23% Q3 relatively stable, with a fxed ranking of daily trading volume in 2020Q4. Fake trading volume has decreased, and industry 42% concentration has increased. 15% 9% 22% 4% At the same time, by comparing the market-wide spot trading volume and the 3% Q4 daily trading volume trends of key exchanges that account for a larger and more authentic trading volume, we can fnd that the trading volume trends of key exchanges in 2020H2 and the market-wide spot trading volume trends are 48% more coincide. This means that the market will gradually wash away the noise, the Binance problem of fake trading volume have been improved, and the exchanges that rely Huobi on “fake volume" are slowly being eliminated by the market in 2020. Combining OKEx Coinbase the growth in trading volume of Coinbase, Binance, and Bitstamp in 2020, it can be Kraken seen that large exchanges with traffc advantages and exchanges with compliance Bitstamp licenses will be the main force for future spot trading competition and growth.

‣ 2020 Spot exchanges and market-wide trading volume trends (unadjusted) Source: TokenInsight $50B $140B CEXspotvolume Keyexchangesspotvolume $42B $105B $33B $25B $70B $17B $35B $8B $0B 1/1 2/7 3/15 4/21 5/28 7/10 8/16 9/23 10/30 12/6 12/31 tokeninsight.com 15 RESEARCH

‣ 2020 Total spot and Among the top3 exchanges in term of trading volume, derivatives volume the proportion of derivatives far exceeds the market Source: TokenInsight average.

$21,083B In 2020, the trading volume of crypto derivatives in the whole market was reported Spot to be $12,412B, and the spot trading volume was 1.71 times that of derivatives. But the top3 exchanges (Binance, Huobi, and OKEx) have only 0.50, 0.24, and 0.37 of the ratio, which is much lower than the market average. This $12,314B shows that the top3 exchanges have focus more on the derivatives business than the market average. Of the other exchanges, only Kraken has derivatives business, Derivatives $11,000B $22,000B but its annual derivatives trading volume is just 24% of the spot.

‣ Top3 exchanges (in terms of volume) spot/derivative ratio in 2020 Source: TokenInsight ‣ 2020 Spot/Derivatives Ratio Source: TokenInsight Spot Derivatives Spot Derivatives Spot Derivatives

1.71x 0.50x 0.24x 0.37x

Binance Huobi OKEx BinanceFutures HuobiFutures OKEx(Futures)

From a quarterly perspective, the strong rise in Bitcoin prices in 2020Q4 led to the highest trading volume ratio of derivatives/spots in 2020Q4 among the top3 exchanges (3.34 times). Binance's derivatives trading volume surpassed Huobi ($848B) in 2020Q4 ($1,170B), leaping to the top of the list of derivatives trading volume. The quarter-to-quarter growth rate of up to 142% brought its derivatives/ spot ratio to 2.57 in 2020Q4. In 2020Q4, the growth of Huobi derivatives volume (63%) was not as good as that of Binance (142%) and OKEx (131%).Hence it’s market share was squeezed, and the ratio of derivatives/spot trading volume also declined.

‣ Ratio of top3 exchanges derivatives/spot trading volume in 2020 Source: TokenInsight Q1 Q2 Q3 Q4 6X 5.20 4.69 4.32 4.12 4X 3.55 2.90 2.57 1.94 1.76 2X 1.33 1.58 1.57 Binance Huobi OKEx tokeninsight.com 16 RESEARCH

3. Conclusion

Throughout 2020, the cryptocurrency spot trading market has experienced turbulence. The market crash on March 12 caused a severe blow to market confdence, and the sideways price of Bitcoin in the middle of the year caused the market to become deserted. But at the same time, the outbreak of DeFi at the end of June injected vitality into the market, and the entry of traditional institutions and the rise in Bitcoin prices in 2020Q4 brought an infux of funds to the market. The cryptocurrency market swept away from the downturn in 2019 and started a bull market in the last few months of 2020.

As the most important factor affecting spot trading activity and market sentiment, the price of Bitcoin has fuctuated sharply this year. Against the background of the spread of the Covid-19 pandemic in the frst quarter and the soaring global economic uncertainty, along with the meltdown of U.S. stocks, the price of Bitcoin plummeted from more than $10,000 in February to below $5,000. Subsequently, although the Bitcoin price was restored in April and May, it fell into a sideways movement in June and early July. In October, the entry of traditional institutions drove the skyrocketing price of Bitcoin. The price of Bitcoin continued to soar in 2020Q4, and fnally closed at a price of more than 28,000 US dollars, an increase of as much as 160% in three months.

The volume of spot trading showed a high degree of correlation with Bitcoin prices in 2020Q4. Following the continuous contraction in the frst three quarters, the market was encouraged by the skyrocketing Bitcoin, trading volume continued to rise during 2020Q4. At the same time, the problem of fake trading volume was alleviated in 2020, and "fake volume" can no longer become a means of competition for exchanges. Moreover, large exchanges and exchanges holding licenses in either UK or US have demonstrated their competitiveness in the fuctuating market conditions and achieved market expansion.

Except for the 3/12 plunge, institutional admissions, and Bitcoin's skyrocketing, one of the most eye-catching industry hotspots in 2020 is undoubtedly, DeFi. DeFi achieved a qualitative breakthrough in 2020. The trading volume of AMM-based decentralized exchanges (DEX) continues to surge, from less than 0.01% of the spot trading volume of centralized exchanges at the beginning of the year to more than 1% at the end of the year. At the same time, multiple DeFi assets achieved skyrocketing in 2020, driving the trading enthusiasm of the cryptocurrency market. DeFi not only contributes to trading volume, but also brings countless innovations and future development possibilities to the industry.

However, it is worth noting that, as a relatively mature market in cryptocurrency trading, the growth of the spot market was not performed as good as the derivatives market in 2020. The sharp rise in Bitcoin in 2020Q4 had a particularly strong impact on the derivatives market, making the quarterly trading volume of derivatives surpassed the spot for the frst time.

As of 2021, under the tone that Bitcoin prices continue to hit new highs at the beginning of the year, cryptocurrency are expected to continue the bull market at the end of 2020. While the development of DeFi impacts centralized spot trading, it will also contribute to the mobilization of overall spot trading activity. tokeninsight.com 17 RESEARCH

EXCHANGES Except for BNB and HBTC, both the price and trading volume of exchanges token either shrunk or running in the spot in 2020. Moreover, in TOKEN 2020Q4, the price increase of bitcoin exceeds that DYNAMICS of mainstream exchanges token. 1. Exchanges Token Volume and Price Trends

In 2020, the overall spot trading volume of exchanges token is about $250B, accounting for 1.19% of the total market spot trading volume. The highest quarterly trading volume occurred in the frst quarter while Q3 had the ‣ Percentage of exchanges lowest volume. token volume in total volume Source: TokenInsight ‣ Mainstream exchanges token trading volume in each quarter of 2020 Source: TokenInsight BNB HT OKB KCS ZB ZT HBC 1.19% Q1 Q2 Q3 Q4 $16B $32B $48B $64B $80B Compared with mainstream cryptocurrencies, with the exception of Binance's BNB and HBTC (added to the market in 2020H2), after the "312" event of 2020Q1, the prices and trading volume of other exchanges token have shrunk signifcantly or stagnated. Although BNB was hit in Q1, it still achieved weak growth in Q2. However, the cryptocurrency bull market that began in Q3 pushed up the price and trading volume of BNB. In Q4, BNB trading volume has accounted for 64.8% of the mainstream cryptocurrency trading volume, close to two-thirds, and its quarterly average price has reached 29.818 US dollars, much higher than others.

‣ 2020 Exchanges tokens’ quarterly average prices Source: TokenInsight

Exchanges Exchanges 20Q1 20Q2 20Q3 20Q4 Token

BNB Binance 17.323 16.070 21.720 29.818 OKB OKEx 4.149 5.018 5.587 5.435 HT HuobiGlobal 3.684 4.023 4.549 4.153 HBC HBTC N/A N/A 3.403 3.067 KCS KuCoin 1.134 0.938 1.038 0.826 ZB ZB 0.265 0.231 0.262 0.267 ZT ZBG 0.046 0.052 0.047 0.051 tokeninsight.com 18 RESEARCH

2. Exchanges Token Analysis

The "312" event was the true turn in the performance of the exchanges tokens throughout the year. Before March, they performed much better than Bitcoin. Among them, OKB issued by the OKEx platform increased by 150% compared with the beginning of January, which was the best performance. However, after the "312" incident, affected by market panic, the prices of mainstream exchanges tokens drop together with mainstream cryptocurrencies, and some of their price even lower than in early January. Although the market gradually recovered in Q2 and Q3, the performance of exchanges token began to diverge since then.

The large exchanges tokens represented by BNB, OKB, and HT performed well after the turbulence in the middle of the year. Their yearly gain has been higher than that of Bitcoin did and closely followed the bull market. Throughout the year, although their performance was not as good as Bitcoin, both BNB and OKB reached the highest level at the end of the year, up nearly 200% compared to the beginning of the year. in contrast, HT performed relatively fat in Q4, with a stable annual growth rate of 50%, but still better than KCS, ZB, and other exchanges tokens.

However, other mainstream exchanges tokens performed disappointingly after the "312" incident. Most of their performance was inferior to mainstream exchanges tokens, and some exchanges even fall below their initial prices. The reason is the market consensus is concentrated on exchanges with more risk management capabilities. Behind the stability and rise of their prices, investors affrm the value of the exchanges they represent. For smaller exchanges, with lacking market consensus, so even if their exchanges tokens enter a bull market in the second half of the year, the price of their exchanges tokens will be more diffcult to rise.

‣ Mainstream exchanges token and Bitcoin price trends in 2020 Source: TokenInsight

BNB HBC HT KCS OKB ZB BTCPrice

300%

250%

200%

150%

100%

50%

0%

-50% 1/1 3/2 5/1 6/30 8/29 10/28 12/27

tokeninsight.com 19 RESEARCH

USERS 1. Users’ Source Analysis The source of search volume refects a certain extent the distribution of exchanges users and the macroeconomic situation of user groups. TokenInsight uses Google AND Trends search interest which greater than 10 as the threshold, and conducts statistics on the distribution of user search volume for the top 12 large spot exchanges by volume and 3 emerging exchanges that perform well in 2020. The POPULARI results show that 43.8% of user searches come from developing countries/regions, TY while over half of user searches come from developed countries/regions. From the perspective of exchanges, there is a signifcant gap in the source of search volume among users of different exchanges. Exchanges headquartered in major developed countries/regions, such as Coinbase, Kraken, Bitstamp, BitZ, etc, almost all of their search volume comes from developed countries/regions. Bitfnex, Binance, and other exchanges have a relatively wide and diverse source of users. Huobi, HitBTC, CoinEx, and other exchanges are mostly searched in developing countries/regions, especially CoinEx, all the search volume comes from developing countries/regions.

The different regional sources of user search volume may be related to the market expansion strategies of different exchanges. Taking large spot exchanges as an example, Coinbase focuses on the European and American markets, while Binance and CoinEx take globalization as their development keynote. In the long run, these Note: The number in the figure represented the number of will all be refected in the source of user search volume. countries. the figure only shows the distribution of search volume from corresponding countries, reflecting ‣ Source of exchanges visits (In terms of developed/developing the wide range of users. The more country/region) countries with search Source: Google Trends. TokenInsight interest greater than 10, the higher the exchanges’s ranking, but it does not mean that the overall search DevelopingCountry/Region volume is high. DevelopedCountry/Region

Bitnex 26 34 Binance 25 28 CoinbasePro 2 28 HitBTC 19 8 BitMax 12 11 HBTC 6 7 Huobi 9 4 Kraken 10 56.3% OKEx 5 4 Diginex 4 4 43.8% BitZ 7 CoinEx 6

ZB 3 3 DevelopingCountry/Region DevelopedCountry/Region Gate.io 2 3 Bitstamp 2

15 30 45 60

tokeninsight.com 20 RESEARCH

From an intercontinental perspective, in 2020, the regions that are keener to search for cryptocurrency exchanges are concentrated in Europe, Southeast Asia, and the Middle East, especially in Europe. Among the sources of exchanges search volume, the search interest of European countries reached more than 10 for about 125 times, accounting for 46%, followed by Southeast Asia and the Middle East, accounting for 12.1% and 11.0% respectively.

‣ Distribution of exchanges-related search interest in 2020 Source: Google Trends, TokenInsight

Europe SoutheastAsia MiddleEast EastAsia LatinAmerica 12.1% SouthAsia Africa NorthAmerica 46.0% Oceania 11.0%

10.3%

1.8% 6.6% 5.1% 2.6%

4.4%

But while going deep into the country/region perspective, there is something different. In 2020, among the major cryptocurrency exchanges searches, the most frequently appeared source in South Korea, followed by Hong Kong and Singapore, both located in East Asia and Southeast Asia. Taking into account the important positions of Hong Kong SAR and Singapore in the foreign exchanges trading and cryptocurrency market, the infuence of investors from the Asian region in the cryptocurrency market has become increasingly prominent.

‣ Distribution of search interest by region in 2020 Source: Google Trends, TokenInsight

tokeninsight.com 21 RESEARCH

2. Community and Search Interest

Cryptocurrency market have performed well in 2020, and the number of exchanges’ followers from various social platforms has increased. In the whole year, Binance has more than 1.4 million Twitter followers, with the average quarterly growth reaches 9.8%. Binance, OKEx and Huobi Global's followers in Q4 increased by more than 30% in compared to Q1. Among them, Huobi Global had the highest 34% increase. It is worth noting that in the annual statistics, the growth of Bitstamp and Poloniex’s followers is not obvious, especially Bitstamp, which is only increased by 1.6%.

‣ Twitter followers of each exchanges in 2020 Source: Twitter, TokenInsight

20Q1Followers 20Q2Followers Q2QoQ 20Q3Followers Q3QoQ 20Q4Followers Q4QoQ

2Million 18.0%

13.5%

9.0% 1Million 4.5%

0.0%

-4.5% Binance Kraken Bitstamp KuCoin Poloniex OKEx CoinbasePro HuobiGlobal From the perspective of search interest, the search heat of exchanges fuctuates throughout the year, but during the large-scale market turbulence in March, the DeFi boom in 20Q3 and the bull market at the end of 2020, the search heat of each exchanges has risen overall.

‣ Year-round search interest of exchanges in 2020 Source: Google Trends, TokenInsight

Binance Bitnex Bitstamp CoinbasePro Coinex Huobi Kraken OKEx 100

83

67

50

33

17

0 2020/1/12 2020/3/22 2020/5/31 2020/8/9 2020/10/18 2020/12/27 tokeninsight.com 22 RESEARCH

3. Keywords Searching Analysis

Binance is the most searched keyword among all exchanges in 2020, and search interests on different exchanges reveal the direction of future customer acquisition.

Related keyword search analysis is an effective means to understand the development direction of each exchanges and user preferences. TokenInsight produced the following keyword distribution map based on relevant topics that users of major exchanges and emerging exchanges pay attention to in 2020.

‣ Distribution of keywords that users of each exchanges pay attention to in 2020 Source: Google Trends, TokenInsight

It is worth noting that almost all users searching for mainstream exchanges, except those searching for BitMax, will fnd the keyword Binance. The related search keywords of BitMax and HitBTC are mainly in Japanese, while other exchanges rarely show related search keywords in Japanese, which shows the important position of the two exchanges in the Japanese market. Besides, some hot search words on exchanges also revealed the exchanges' possible customer acquisition direction. Taking several large exchanges as examples, Binance’s hot search terms include information such as Argentina and Binance US, Huobi includes related words such as Turkey and Italy, and OKEx has a large number of Korean search hot words. tokeninsight.com 23 RESEARCH

REGULATION DYNAMICS

LatestNews • In March 2020, CFTC, the top regulator of fnancial derivatives in the United States, clarifed the parameters used for physical delivery of cryptocurrency. • On July 24, 2020, U.S. regulators allowed banks to hold USA cryptocurrency. • On September 15, 2020, the 49 U.S. states and the capital of Washington will unify the regulatory framework to simplify the compliance work of cryptocurrency companies. • On September 29, 2020, the US Securities and Exchanges Commission (SEC) stated that it would not impose sanctions on digital security exchanges that comply with existing regulations. • In October 2020, the US Department of Justice accused BitMEX and its executives of violating the Bank Secrecy Act. • On October 9, 2020, the U.S. Attorney General issued a cryptocurrency enforcement framework. • On July 31, 2020, Russian President Putin signed a law to regulate cryptocurrency.

Russia • On July 10, 2020, the Anti-Money Laundering Financial Action Task Force (FATF) issued a review report on the implementation of revised standards for cryptocurrency and their service providers on stable currency-related anti-money laundering and anti-terrorist fnancing issues. FATF • On August 24, 2020, the UK regulator plans to extend fnancial crime reporting obligations to cryptocurrency trading providers.

UK • On October 7, 2020, the British fnancial regulator banned the sale of crypto derivatives to individual investors.

• In March 2020, South Korea promulgated the "Reporting and Use of Specifc Financial Transaction Information Act" to amend the law to allow the application of AML and CFT rules to cryptocurrency Korea exchanges.

• In April 2020, Japan implemented an amendment bill that requires two KYC documents to be submitted when opening an account on a cryptocurrency exchanges. • In January 2020, the Financial Services Agency of Japan: To conduct Japan cryptocurrency derivatives trading volume, registration applications must be made in advance.

tokeninsight.com 24 The report is based on public sources considered to be reliable, but TokenInsight Inc. does not guarantee the accuracy or completeness of any information contained herein. The report had been prepared for informative purposes only and does not constitute an offer or a recommendation to purchase, hold, or sell any cryptocurrencies (tokens) or to engage in any investment activities. Any opinions or expressions herein refect a judgment made as of the date of publication, and TokenInsight Inc. reserves the right to withdraw or amend its acknowledgment at any time in its sole discretion. TokenInsight Inc. will periodically or irregularly track the subjects of the reports to determine whether to adjust the acknowledgement and will publish them in a timely manner.

TokenInsight Inc. takes its due diligence to ensure the report provides a true and fair view without potential infuences of any third parties. There is no association between TokenInsight Inc. and the subject referred in the report which would harm the objectivity, independence, and impartiality of the report.

Trading and investing in cryptocurrencies (tokens) may involve signifcant risks including price volatility and illiquidity. Investors should fully aware the potential risks and are not to construe the content of the report as the only information for investment activities. None of the products or TokenInsight Inc, nor any of its authors or employees shall be liable to any party for its direct or indirect losses alleged to have been suffered on account thereof.

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