Estimating the Market Capitalisation and Virtual Value of Leading Crypto Exchanges
Have you ever wondered how much your favorite cryptocurrency exchange is truly worth?
Most crypto platforms operate as private companies and are not publicly traded. However, Coinbase stands out as an exception, with its net worth available in the public domain.
This naturally raises the question: can the value of other crypto exchanges be estimated by comparing them to Coinbase, given its known valuation?
For the first time, this analysis explores the methods used to answer this question, employing precise mathematical calculations and a comprehensive assessment of both tangible and intangible factors.
Disclaimer: the article is presenting a possible logic that may or may not be utilised in calculating the exchanges’ virtual capitalisations. While based upon verified data, Coinbase is discussed and compared to performance of non-public exchanges, with extensive market speculation throughout, hence, the results of the calculation do not represent the factual exchanges’ market capitalisation and value.
Note: the data below, as well as the basis for the Exchanges’ Trust and Value Index, is relevant as of November 20, 2024.
Ratio-Based Evaluation of Cryptocurrency Exchanges’ Virtual Capitalisation
As of November 20, 2024, Coinbase’s market capitalization was $81.26 billion.
Adrian Barkley from СryptoDaily introduced a methodology to estimate a metric known as the Virtual Capitalisation of cryptocurrency exchanges. This approach uses ratios based on key metrics that most accurately reflect an exchange’s net worth relative to Coinbase. The primary metrics include:
- Average daily trading volume
- Web traffic
- User count
- Exchange token’s market capitalization
To apply this formula, the research evaluates seven leading cryptocurrency exchanges of varying sizes and potential values:
- Binance
- Bybit
- OKX
- Kraken
- WhiteBIT
- Gate.io
Data and insights have been collected from sources such as CoinGecko, CoinGlass, SimilarWeb, and official statements from the exchanges to compile the following statistics:
The value of each exchange will be assessed individually using one of the chosen metrics to establish an estimated range.
The final calculations produce the following results:
Exchanges’ Trust and Value Index
While numerical metrics may help estimate an exchange’s virtual value, the true measure lies in trust and overall worth.
To gain a more comprehensive understanding of an exchange’s market position, the Exchanges’ Trust and Value Index has been introduced.
This analytical framework assesses both the financial stability and trustworthiness of an exchange. The Index employs a numerical scale from 1 to 10, where 10 represents the highest score and 1 the lowest.
The evaluation is based on six key metrics: transparency, activity, capital, security, compliance, and proof of reserves.
The Transparency metric in the “Exchanges’ Trust and Value Index” evaluates how openly an exchange operates, particularly regarding the disclosure of its financial status, operations, and decision-making processes.
Activity assesses the organic traffic and user base of a cryptocurrency exchange, providing key insights into its operational performance. This metric is determined using self-reported audience data and web traffic analytics.
The Capital metric measures the financial strength and liquidity of a cryptocurrency exchange, calculated based on total trading volume and futures trading open interest (OI).
Security evaluates how effectively an exchange protects user funds, data, and overall platform integrity. It examines anti-money laundering (AML) practices, compliance with the Cryptocurrency Security Standard (CCSS), the exchange’s history of security incidents, and asset custody protocols.
Compliance assesses how well a cryptocurrency exchange adheres to legal and regulatory requirements, including the legality of its operations, sanctions compliance, and integration of Financial Action Task Force (FATF) frameworks.
Results:
When assessing cryptocurrency exchanges using the Index, distinct differences become evident.
In terms of transparency, exchanges like Binance, Coinbase, and Kraken make their top management and proof of reserves publicly accessible. Others, such as OKX, ensure transparency through third-party audits or strategic partnerships.
For activity, Binance stands out with over 200 million active users and significant web traffic. Coinbase follows with 73 million users, while Bybit lags with 10 million. WhiteBIT, though smaller, reports a respectable 5 million users.
The capital held and traded across these platforms varies substantially. Coinbase ($6 billion), OKX ($5.4 billion), and WhiteBIT ($5.1 billion) report nearly identical daily trading volumes. In contrast, Binance and Bybit dominate with $31 billion and $7 billion in daily trading volume, respectively.
Compliance is another key differentiator. OKX, Coinbase, and Bybit adhere to FATF standards, with Coinbase standing out due to its strict compliance with U.S. regulations.
Regarding proof of reserves, WhiteBIT relies on third-party audits but keeps its reserves private for security purposes. Binance, OKX, and other exchanges maintain public transparency, while Bybit, Kraken, and Coinbase offer personalized access to their reserves.
What the Exchanges’ Trust and Value Index Means for Crypto Exchange Value
The results of the Exchanges’ Trust and Value Index demonstrate that a crypto exchange’s value goes beyond basic ratio calculations.
Trust plays a critical role alongside liquidity, meaning this index evaluates not only the financial worth of an exchange but also its long-term sustainability and the level of user confidence it builds.
Ultimately, an exchange’s true value is not solely determined by numbers. It depends on both its current position and its potential for future success or failure.
