Crypto Exchanges 2023 Annual Report

2023 was a restorative year for the crypto industry. From mid-2022 to early 2023, we truly experienced a bear market. However, numerous positive developments followed, such as the completion of the Ethereum Shapella upgrade, the launch of BRC-20 Ordinal, and BlackRock's submission of the Bitcoin spot ETF application. These developments, akin to a gentle rain, nurtured traders' confidence, and the entire market gradually began to recover. Exchanges are one of the most important segments of crypto, and changes in trading volume and market share are the most direct manifestation of the industry's rise and fall.

TokenInsight, as a crypto rating and research company, has been tracking the data of coins and exchanges. We have summarized the data performance of the exchange industry over the year and selected the top 10 centralized and decentralized exchanges, hoping to get a clear picture of the changes over the year and the competition in the exchange market through the changes in data.

The data below summarizes the top 10 exchanges selected by TokenInsight and does not include the total trading volume of all exchanges. This is done for two main reasons

• The number of exchanges in the Crypto industry is so large that it is almost impossible to get a complete count of all exchanges.
• The top 10 exchanges we selected have about 95% or more of the market share and therefore reflect the overall market situation.

Top 10 exchanges volume reached $34.26 trillion, dropping more than 16% YoY

In early 2023, the entire crypto market started to rebound, with BTC's price slowly rising. The trading volume surged from $500 billion to around $1.5 trillion, achieving nearly a threefold increase within a month. The first peak of daily trading volume occurred on March 14th, approaching $2.5 trillion. On that day, BTC's price experienced a rapid surge (16.6%) within 24 hours, jumping from $20,000 to above $26,000.

Q2 and Q3 saw the overall market stabilizing, with slight declines. Positive news such as the successful completion of the Ethereum Shapella upgrade, the successful mining of Ordinals, and BlackRock's submission of the Bitcoin spot ETF application, sparked investor enthusiasm, which led to a brief breakthrough of BTC's price above $30,000 in late June. The peak daily trading volume occurred on July 14th, reaching $208.6 billion. However, with the fading excitement around Ordinals and Bitcoin ETF, the price of BTC fell back to $26,000 in August, and daily trading volume also decreased, reaching a low of around $200 billion on September 24th.

In October, as the deadline for the approval of the Bitcoin spot ETF application approached, traders expressed confidence in its approval, leading to a surge in market trading activity. Q4 witnessed a substantial increase in both trading volume and BTC's price, with the peak daily trading volume occurring on November 10th, surpassing $230 billion after the news of BlackRock's submission of the Ethereum spot ETF application. Subsequently, fueled by accumulated positive sentiment, BTC's price finally broke through $40,000 on December 4th, reaching its highest point in 19 months.

Binance’s market share decreased from 54.2% to 48.7%, marking a 5% decline, yet it still maintains a dominant position

In the first half of 2023, Binance's market share remained relatively stable, fluctuating between 52% and 60% on average. However, Binance's market share started to be impacted after the end of its Zero-Fee Bitcoin trading promotion in March and the SEC filing a 27-page lawsuit against Binance in June. Three months later, the market share dropped to below 50%.

On November 22nd, following Binance CEO CZ's public resignation letter, Binance's market position faced severe disruption, plummeting to 32% on the 24th of the same month. However, the market share quickly stabilized and gradually rose to above 45%. By the end of the year, Binance's market share remained stable at around 48%. After this event, Binance's market share only decreased by 5%, which was better than market expectations. Besides, regulatory authorities did not charge Binance with issues related to user asset security, indicating that market and user confidence in Binance still persists.

During this process, OKX and Bybit experienced the most significant gains, with their market shares increasing by 4.3% and 2.2%, respectively.

Top 3 in spot: Binance, Upbit, and OKX. Top 3 in derivatives: Binance, OKX, and Bybit

Binance firmly held the market's top position with a 53.7% share in spot and derivatives trading. It's noteworthy that this figure was 60.1% in 2022, indicating a decrease of nearly 6.5%. Despite facing the impact of the aforementioned significant events, Binance still maintains an absolute leading position compared to other exchanges.

OKX and Bybit take the second and third positions with market shares of 15.7% and 11.6%, respectively. Notably, OKX ranked in the top three for both spot and derivatives trading volumes. Upbit secured the second position in spot trading volume, but due to a substantial difference between derivatives and spot trading volumes, it doesn't make it to the overall trading volume list. Similarly, Coinbase ranked fourth in spot trading volume but with a relatively small derivatives trading volume, placing it only eighth in the total trading volume list.

Bybit, Bitget, KuCoin, Gate, Kraken, and Bitfinex all make it to the top 10 on both lists. Upbit and Coinbase only secure positions in the top ten for spot trading, while BitMEX and Deribit are only in the top 10 of the derivatives list.

COIN stock price grew much more than the fluctuating degree of Coinbase’s trading volume

The price of COIN increased from $33.6 at the beginning of 2023 to $173.9 at the end, marking a ~418% rise.

S&P 500 rose by 22.46%, and Nasdaq increased by 42.03% in 2023. Thanks to the recovery in the crypto market, COIN's performance significantly outperformed the market.

Throughout 2023, Coinbase's trading volume remained relatively stable. Despite a slight decline in Q2 and Q3, the volume rebounded to higher levels by the end of the year, slightly exceeding that at the beginning of 2023.

In 2023, Gate listed 362 new tokens, bringing the total number of listed tokens to 1,871, surpassing the rest centralized exchanges

In 2023, Gate added a total of 362 new tokens. The number of weekly newly listed tokens correlates with the fluctuation trends of Bitcoin price. During the industry's recovery in Q1 and Q2, plenty of new crypto assets emerged in the market, reaching a peak of 21 new listings in the week of 5.14.

Although the number of Gate's newly listed tokens experienced a significant decline in Q3, with the booming BRC20 ecosystem in Q4, numerous BRC20 assets entered the market, leading to a resurgence in the number of new listings.

Over 90% of the volume in Bybit, Bitget and OKX was from derivatives

The chart above illustrates the proportion of spot and derivatives trading for various exchanges. In 2023, Bybit, Bitget, and OKX stood out as exchanges primarily focused on derivatives trading among the top 10, with approximately 91% of their trading volume originating from derivatives trading.

Although Binance and KuCoin do not rely on derivatives as heavily as the aforementioned exchanges, a significant portion of their trading still came from derivatives, accounting for approximately 70% to 80%.

Gate, Huobi, and Cryptocom occupy a middle position, with contributions from spot trading ranging between 30% and 40%. In contrast, Bitfinex and Kraken exhibit a more significant reliance on spot trading. Specifically, Kraken saw over 80% of its trading volume sourced from spot trading in 2023.

It's worth noting that, as of now, Coinbase derivatives exchange only provided 2 kinds of derivatives: nano Bitcoin future contract (BIT) and nano Ethereum future contract (ET). Both products had too little volume to show a distinct difference from the others. Hence, this report does not take those two into account.

Binance maintained its dominant position with a 50.4% market share, while OKX's market share rose to 19.4%

Binance's market share decreased from 55.9% at the beginning of the year to 50.4% at year-end, but its performance remains strong. Despite experiencing one of the most significant regulatory events in history, the market share only dropped by 5.5%, outperforming market expectations.

OKX's market share reached 19.4%, showing an increase of approximately 4% from the beginning of the year. At the beginning of the year, the market share gap between Bybit and OKX was only about 2%, but by the end of the year, this gap had widened to 4.4%. Following closely behind is Bitget, with the exchange's market share fluctuating around 9%.

Gate and KuCoin, on the other hand, demonstrated stable performance throughout the year, with their market shares consistently hovering around 2-3%.

Open interest rose to $35 billion, an increase of 60% from the beginning of 2023

By the end of 2023, the top 10 derivatives exchanges’ total open interest increased by 60% from January 1, which is highly relative to Bitcoin price.

The lowest open interest touched $19.4 billion (March 11, Bitcoin $20,631), and the highest reached $35.2 billion (December 28, Bitcoin $42,605), showing an extraordinary growth of 81.5% (Bitcoin’s market cap doubled, an increase of 107%).

Looking at specific exchanges, Bitfinex, Kraken, Deribit, and Bybit all achieved over 100% growth in open interest. Among them, Kraken experienced the highest growth, reaching 185%, growing from $76 million to $220 million.

In comparison, while Gate and KuCoin each grew by only 33% and 28% respectively, their performance remains noteworthy, especially when compared to the declining open interest trend of BitMEX.

Top 10 DEX yearly trading volume reached $977.5 billion. Orca became the biggest winner

With the year-end surge in SOL prices, the Solana ecosystem has once again garnered market attention. Orca and Raydium, as main DEXs in Solana ecosystem, had profited considerably during this period, experiencing varying degrees of market share growth. Orca, in particular, achieved a market share of 9.22% at the end of the year.

In April 2023, the launch of PancakeSwap V3 further enhanced PancakeSwap's functionalities. By Q4, the average daily trading volume of V3 exceeded V2's volume by more than four times. Consequently, PancakeSwap's market share grew by 5.1% over the past year.

In contrast, the performance of GMX and dYdX in 2023 has been less than satisfactory. While these two exchanges increased their market shares by 28.4% and 6.7%, respectively, in 2022, GMX seems to have barely maintained its existing market share in 2023, while dYdX experienced a decline of nearly 10%.

DEX accounted for 2.83% of total volume in 2023, remaining stable overall

In 2023, DEX performance remained relatively stable in terms of trading volume and market share, with a market share of approximately 2.83%.

In Q1, DEX reached its peak market share at 2.98%. Meanwhile, Q1 is also the quarter with the largest transaction volume. However, in the subsequent two quarters, both trading volume and market share gradually contracted. Although there was a slight increase in both metrics in Q4, the overall proportion did not change significantly.

It is evident that despite despite Binance facing continuous troubles with U.S. regulatory authorities last year and CZ resigning as Binance CEO for this reason, traders do not seem to have lost confidence in centralized exchanges. Particularly, after settling with multiple U.S. regulatory agencies, Binance still maintains its top position in the industry with a market share leading the second-place by 32.6%. These events did not have a massive impact on the market landscape as the FTX collapse did in 2022. Traders still prefer the perceived safety of centralized exchanges.

FTT, MX, BGB prices increased > 200%, while CET and HT fell, with HT falling by 50%

As the market gradually recovered, the exchange tokens experienced varying degrees of price surges. FTT, MX, and BGB, in particular, saw increases exceeding 200%, surpassing the rise of BTC during the same period (166%).

Notably, FTT exhibited an impressive surge of 270%, primarily attributed to SEC Chairman Gary Gensler's public statement in November, stating that "rebooted FTX run by ex-NYSE chief is possible if done ‘within the law’". Following this announcement, FTT surged over 240% within two weeks. Subsequently, as FTX debtors and FTX digital markets announce global settlement, FTT's price experienced further upward momentum.

According to the ratio of Vol/M.Cap, a higher ratio signifies higher liquidity. The ratio of MX, GT, OKB, and CET was <0.01, showing they have lower liquidity and higher slippage.

Although HT has a relatively high ratio of 0.033, indicating high liquidity, its price has dropped by approximately 50%. This phenomenon suggests that traders are predominantly selling their holdings of HT, which is not favorable news for HTX.

Among all tokens of DEXs, JOE led the way, with an increase of more than 300%

Similar to centralized exchange tokens, the prices of decentralized exchange tokens also experienced varying degrees of growth in 2023, with the exception of BSW. Trader Joe's performance was particularly outstanding, with JOE witnessing nearly a 400% increase over the past year. In contrast, the sector leader, UNI, had a relatively modest rise of 45%. Despite Uniswap Labs proposing the draft for V4 in June, it failed to create significant waves in the market, and UNI's price did not increase as expected.

According to the ratio of Vol/M.Cap, all decentralized exchange tokens exhibited high liquidity, which indicates that traders prefer trading DEX tokens over their CEX counterparts, even though the returns may not necessarily be higher.

Please note that dYdX utilizes an off-chain orderbook and matching engine with the on-chain settlement, so it is not considered a fully-decentralized exchange. Osmosis is a Cosmos app chain with its own validators, so it is different from the other players that are DApps (smart contracts) deployed on layer 1 blockchains.