A curated list of platforms, protocols and trading products facilitating the exchange, lending and borrowing of crypto assets.
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An aggregation platform will allow you to buy and sell cryptocurrencies, but it does not have its own order-book. Instead, it will look for the best prices across their connected decentralized or centralized exchanges. If needed the order is split among these exchanges to achieve the best price for the trade.
A Buy/Sell platform is a type of exchange where you can quickly convert fiat money (cash) to crypto and the other way around. Most websites offer bitcoin and the most popular altcoins.
To be able to purchase crypto or sell it, you will have to register first and often also go through the KYC (Know your customer) procedure. The price you have to pay or the money you’ll receive when selling can be easily seen in the order process.
Most websites offer different payment methods to fund your account in order to purchase coins. The price you pay is always above the spot market price, because of the handling costs and the profit margin. You can also send the crypto to the wallet address of your preference immediately, but the transfer speed depends on the blockchain as well. This could take quite a while in the case of Bitcoin.
If you want to sell your crypto it’s often required to have a connected bank account to your platform account. You can lock in the selling price, which in this case is lower than the spot market price, and you’ll have a limited time to deposit the agreed amount. Once it’s received by the platform a payout to your bank account can be initiated.
A CFD is an abbreviation of ‘contract for difference’ and offers traders an opportunity to profit from price movements, either up or down. It is not required to own the underlying assets. This product calculates the price difference between the trade entry and the exit. This makes it very accessible to trade large amounts of the underlying asset without having to put in a lot of capital upfront.
The CFDs are accomplished through a contract between the client and the broker. This service usually has a daily fee, called the ‘rollover’, and therefore mostly not suitable for long term positions.
CFDs are developed in the traditional financial markets and there are many brokers offering these products based on stocks, forex, and commodities. Some of those brokers also offer CFDs based on cryptocurrencies now. These are mostly only large market caps like Bitcoin and Ethereum.
A coin converter offers its users a service to instantly convert one crypto to another, which is also known as swaps. There is no order book to choose your own price for your buy or sell order but instead offers you a calculated price. This price can be based on different sources, for example, it could be based on an exchange protocol, their own set of rules (service calculates the price internally) or from a price API.
For users, this is a low-effort method of changing between coins quickly without having to send it to an exchange, where you often must sell it for Bitcoin first in order to buy the other coin again. Coin converters can sometimes have a high fee or unattractive pricing for the swap though.
At a commodities exchange, various commodities are traded. Most markets are agricultural products like coffee, rice, sugar, wheat, barley, maize, cotton and milk products. Oil and precious metals like gold and silver are also traded here. It depends on the exchange, which commodity is supported. It can be traded in different types of financial products, also known as derivatives, like options, futures, and forwards. The trades can be executed with USD or Bitcoin (BTC) as a base.
A derivative is a financial product or instrument like futures contracts or options. Its value is derived from an underlying asset and priced based on its fluctuations. Derivatives are often leveraged and therefore come with increased risks and rewards. The most common types of these underlying assets are stocks, currencies, bonds, market indexes, interest rates. Nowadays cryptocurrencies or tokens can also be an underlying asset of a derivative.
Derivatives can trade over-the-counter (OTC), but also on an exchange or broker.
At a derivatives exchange, the main focus is enabling the trading of derivatives. These derivatives are standardized and more regulated.
An exchange is an online platform in which you can exchange one kind of digital asset for another. This has an order book with usually many open sell and buy orders for a specific price. Cryptocurrency exchanges can have up to hundreds of trading pairs. Most pairs will be against Bitcoin (BTC), but trading pairs with Ethereum (ETH) or stablecoins, like Tether (USDT) are also very common. Some exchanges offer margin trading, leveraged trading, and advanced orders like stop-limit or One-Cancels-the-Other (OCO) for example.
Exchanges can be centralized or decentralized, where there are several levels of decentralization possible. As for centralized exchanges you don’t own the private key and will lose your funds if the exchange gets hacked or goes offline. Decentralized exchanges offer more control as your funds are usually stored in your own wallet or held in a smart contract. Centralized exchanges are in general a lot faster and offer more trading pairs and trading features.
An Exchange Protocol is not a crypto exchange by itself but is a system to connect buyers with sellers. If this is solved on-chain there will be a fee for every order that is placed in the order book. An exchange protocol solves this problem by conducting the matchmaking off-chain via an intermediate party, also known as a ‘Relayer’. When there is a match between a buyer and seller that trade is then placed on-chain. There are several exchange protocols that enable the peer-to-peer exchange of tokens and assets on the Ethereum blockchain.
An Exchange-traded product (ETP) is a type of security that tracks its underlying asset. These assets can be securities, an index, cryptocurrency, or other financial instruments. It is traded on exchanges just like stocks and therefore its price can fluctuate daily.
An ETP allows the investor easy access to otherwise perhaps difficult to access assets. As for crypto the investor does not have to register at a crypto exchange but can buy an ETP via their familiar stockbroker.
A futures contract, also known as ‘futures’, is a legal contract that allows you to buy or sell an underlying asset like a commodity or security at a predetermined price on a specific day in the future.
The buyer of this contract is obliged to buy and receive the underlying asset when it expires. On the other side is the seller of the contract obliged to deliver the underlying asset at the expiration date. These contracts allow investors to speculate on the direction of the underlying assets and thus can be host to short or long an asset with leverage, but it can also be used to hedge another position.
A futures exchange facilitates the trading of futures contracts. Traders on these exchanges can use leverage to trade these derivatives and can speculate on the direction of the underlying asset with a larger amount than deposited. The margin depends on the exchange and volatility of the underlying assets on the spot market. It can be as low as 2% or as high as 25%.
An index fund, also known as ‘index tracker’, is an exchange-traded fund (ETF) or mutual fund that is designed with preset rules to track a set of underlying products. This can be a market index like the S&P 500 or Dow Jones, but also a combination of crypto assets like Bitcoin (BTC) and Ethereum (ETH). These kinds of funds can provide a broad exposure at low operating expenses relative to actively managed funds since it mimics the underlying assets. An index fund is often used as a good long term passive investment.
Investment funds are common in the traditional finance world, but now also coming to the crypto space. It is a pool of capital from individual investors that is being used to invest collectively with the goal to make a profit. Usually, the investment is done in stocks and bonds, but now also in crypto and blockchain companies. There are two types of investment funds: open-ended and closed-ended.
At a closed-ended fund, the investor has no influence on how the fund’s money is spent. The assets that are bought and sold and the timing is decided by the investment manager. The fund usually has an objective and track record to make this an interesting option for investors, where they can buy and basically forget about it since it’s managed by somebody else. This type of fund issues a limited number of shares in a public offering or via private placement. The fund is set-up as a publicly traded investment company and required registration at the Securities and Exchange Commission (SEC).
An open-ended fund can issue an unlimited number of shares. Therefore it allows for new contributions and withdrawals from investors of the pool. The fund sells the shares directly to the investors and can also redeem them if the investor wants to go out. The shares are priced on a daily basis according to their net asset value (NAV). These funds are more common than the closed-end funds but are not traded on exchanges.
At a lending platform, users can lend or borrow cryptocurrencies and tokens. If you hold the supported crypto assets on the platform you can lend them out and earn interest. Most platforms support Bitcoin (BTC), Ethereum (ETH) and various stablecoins.
The interest percentage depends on the coin and how popular it is. It is also possible to borrow coins when collateral in the form of crypto is provided. This is called a Crypto-backed loan on which interest has to be paid. A lending platform facilitates these lending deals. The users can lose their funds when the platform goes down or when the value of the assets used as collateral drops too quickly and the user has not had enough time to add more funds.
Lending platforms can create an interface with a lending protocol to offer lending and borrowing services. A lending protocol is, in this case, the backend to facilitate the transactions and set the interest rates.
The inner workings of a protocol can be based on algorithmic systems to dynamically adjust the interest rates according to the supply and demand of the underlying asset. Other ways to set the interest rate could be by voting on a blockchain or centrally by the protocol’s admin. The lending protocols play an important role in the DeFi (Decentralized Finance) ecosystem because it provides speculative opportunities to crypto holders.
Peer-to-peer (P2P) is the system where an investor trades directly with another person with no middleman or third party to process the trades. This is different from ‘regular’ cryptocurrency exchanges where a fee is collected on each trade. The P2P approach is a good example of decentralization.
Since the P2P market is still quite small it could be hard to find the right order size match. Online trades are usually protected by using an escrow system. On the website of the P2P exchange users can find the advertisements of sellers and buyers, with their conditions and accepted payment methods.
A relayer is a type of exchange that hosts an off-chain order book. The main functionality for its users is to enable adding, removing, and updating the order book with their orders. Depending on the relayer this can be done via a GUI, API, or both. Relayers utilize one or more Exchange Protocols to offer their exchange services.
The main service of a Relayer is to give traders an interface for an off-chain order book to find a counterparty to make a trade with. Once an agreement between the two parties is found it will be settled directly on the blockchain via the smart contracts of the protocol.
Tokenized assets and securities are called security tokens, which can be traded at a security token exchange. The trading pairs of security tokens can be fiat money or cryptocurrencies. There are centralized and decentralized security token exchanges. The decentralized exchanges can utilize blockchain technology to simplify custody, trading and clearing functionalities. These are often built on the public Ethereum blockchain. The security token exchanges do have to comply with the traditional regulations, like ownership restrictions for example.
A stock exchange is an organization facilitating the trading of financial products like stocks, bonds, derivatives and other securities. These exchanges offer an order book with bid and ask prices. Among the products available on the stock exchanges worldwide is an increasing number of cryptocurrency and blockchain-related products like ETP’s, Funds, Futures and other derivatives.