Cryptocurrency exchanges are among the most lucrative businesses in the digital asset space. Their profitability can be gauged through their platform token buyback and burn mechanisms.
Most exchanges allocate a portion of their profits or trading fees to periodically repurchase their native tokens from the market. This reduces circulating supply, creating deflationary pressure that increases token value. By analyzing these buyback figures, we can estimate each exchange's revenue and profitability.
Top Exchanges: Huobi and Binance Lead in Profitability
The "buyback and burn" concept for platform tokens emerged in 2017 but gained prominence in 2019, particularly among the "Big Three" exchanges:
Huobi Global
- HT tokens burned (Q1-Q3 2019): 33.59 million ($115 million)
- Estimated net revenue: $575 million (using 20% profit allocation formula)
- Projected business profit: ~$368 million (64% margin estimate)
Binance
- BNB burned: 3.7 million ($76.1 million)
- Business profit: ~$381 million (20% profit burn ratio)
OKex
- OKB burned (June-August 2019): 6.1 million ($14 million)
- Spot trading fee revenue: $46.8 million
- Projected profit: ~$30 million (quarterly estimate)
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Second-Tier Exchanges: KuCoin, MXC and BiKi Show Strong Performance
While smaller than the Big Three, these platforms demonstrate notable profitability:
KuCoin
- KCS burned: 656,000 ($715,000)
- Estimated profit: $7.15 million (H1 2019)
MXC Exchange
- MX burned: 38.44 million ($5.61 million)
- Trading fee profit: $5.61 million
BiKi
- BIKI burned: 91 million ($6.26 million)
- Trading business profit: ~$4 million
BKEX
- BKK burned: 8.31 million ($1.11 million)
- Estimated profit: $1.01 million
Key Takeaways from the Analysis
- The cryptocurrency exchange sector remains highly profitable, with significant revenue from trading fees
- Huobi and Binance show nearly identical profitability metrics among top exchanges
- Second-tier exchanges demonstrate strong performance relative to their size
- Platform token economics create transparent metrics for evaluating exchange health
👉 Learn more about exchange tokenomics
Frequently Asked Questions
How do exchange token burns work?
Exchanges typically allocate a percentage of profits (often 10-30%) to repurchase and permanently remove their native tokens from circulation, creating deflationary pressure.
Why are Huobi and Binance more profitable than OKex?
The difference comes from larger trading volumes, more diversified revenue streams, and earlier adoption of token burn mechanisms that incentivize platform usage.
How accurate are these profit estimates?
While based on official burn data, these are projections using each exchange's published formulas. Actual figures may vary based on operational costs and other factors.
What advantages do smaller exchanges have?
Emerging platforms often list newer tokens earlier and may offer lower fees, though they typically have smaller liquidity pools than top exchanges.
How does token burning benefit exchange users?
By reducing supply, successful burn programs increase token value, benefiting holders through appreciation and potentially better platform services through reinvested profits.