Blockchain Project Review: BitMart:6.8 A Centralized Digital Assets Exchange

Original article by EVALUAPE

For more reviews and information,please visit https://evaluape.io/share to download EVALUAPE APP.

A. Introduction

BitMart is a centralized digital assets exchange launched on March 15, 2018.

Advantage:

1) Well-organized team; members with experiences in the blockchain industry as well as the development sector in some of the world’s leading companies;

2) Conventional mode of centralized exchanges with an inclination towards steady progress and focus on compliance issues; registered as an MSB in the U.S.;

3) Operational data is growing steadily with a relatively big user base; focus on the international market;

4) Smooth fiat deposit services; credit cards as a payment option

5) BMXs destroyed in consistency with the repurchase mechanism

Disadvantage:

1) Unremarkable profitability; if the market keeps worsening, the business may not be able to survive in the long term;

2) Due to the significant Matthew Effect in the exchange industry, it is unsure whether the project can achieve further breakthrough in funds and user development;

3) The quality of Coins listed in the exchange is yet to be improved.

B. Industry

Exchanges — Top of the Industry Chain

As the ultimate liquidity provider, digital assets exchanges are basically on the top of the crypto industry chain. In the end, all the participants in the industry have to use exchanges to convert their digital assets into fiat money, including blockchain projects, wallets, crypto media, mining pools, investors and etc. In the middle of 2018, Binance announced that its annual income was expected to reach $0.5–1 billion, which well proved the high profitability of exchanges. In early 2018, numerous digital currency exchanges sprang up due to the high profitability and low threshold of the industry. According to the data by CoinMarketCap, currently, there are over 200 registered exchanges, while there could be tens of thousands of unregistered ones.

Exacerbated Matthew Effect, Bottleneck for Innovation

In general, the comprehensive strength and the attractiveness of an exchange is demonstrated in many aspects, including compliance issues, assets security, funds withdrawal limit, performance, user-friendliness, currency diversity, platform liquidity, derivatives and ancillary services, APIs and etc. Despite the low threshold, a high-quality exchange requires many supporting facilities. For exchanges, it takes time to obtain the trust of users, while liquidity can only be achieved with the accumulation of users. Therefore, top exchanges possess the first-mover advantage in security and liquidity, highlighting the 80–20 rule in the current competition of exchanges.

For young exchanges, driving traffic by listing new Coins has become one of its important business models to win more expansion capacity. However, suffused by the bearish situation, the overall market capitalization falls to $12 million, with the daily trading volume reducing to $2 million. Individuals are more cautious with crypto investment and transactions, while the number of new projects also slumps. Many small- and medium-sized exchanges have no choice but to conduct structural optimization such as pay cuts and layoffs to survive the crypto winter, not to mention innovation or expansion. For example, a Canadian cryptocurrency exchange Coinsquare reduced staff by nearly 30%, while Liqui suspended all its services.

Liquidity Becomes the Basic Competitive Edge in the Bear Market

The core of an exchange is its liquidity as liquidity brings revenue. Revenue can be categorized into transaction fee, withdrawal fee, fee for derivatives and etc. In the initial phase, to gain liquidity, the common practice is to accelerate the listing of new Coins to attract more users.

In bear markets, top exchanges are also threatened by the loss of liquidity. The common response to the problem includes listing more trading pairs, crypto-fiat pairs, adding fiat deposit services or developing derivatives etc. For example, Binance enabled credit card payment while Coinbase and Huobi expanded the future contract business.

More easy-to-use fiat deposit services, more diversified crypto currencies, derivatives, financial services… … All this can help attract more users and boost in-exchange transactions.

For medium-sized exchanges, the priority is always products, which thus help consolidate the user loyalty with their products. Only when the user base and revenue are guaranteed should these exchanges look to build their own characteristics. For example, fiat deposit services, compliance, STO, derivatives, ecosystem expansion (e.g. wallets and incubators) and etc.

Overlap of Character Between Exchanges and Brokerages — Davis Double-Killing Effect

In the traditional financial sector, when market recovers from a bear one to a bullish one, the brokerages often play a leading role in the initial phase due to the high revenue from transaction fee and the favorable market valuation, embodying the double-killing effect. In the field of digital currency, exchanges play most of the functions of brokerages as the role of the latter is largely weakened. If the crypto market can recover from the current bearish situation, it is very likely to experience the same double-killing effect. Therefore, how to survive in the bear market while maintaining the loyalty of users becomes the priority of most exchanges.

C. Mode

BitMart is a world-leading digital assets trading platform established in 2017. The company is based in the Cayman Islands.

As a latecomer, BitMart pays more attention to products and user experience instead of making quick money or gaining popularity via innovative models like “Transaction Fee Mining”: 1) Focus on products and user experience; 2) Global deployment conducted in a steady manner; 3) fiat deposit services to earn reputation and attract users.

Currently, the website of the exchange is available in seven languages, including Chinese, English, Japanese, Korean, Vietnamese, Turkish and Russian. It mainly focuses on the international deployment and has established branches in the U.S., China, Korea and etc. At present, BitMart has attracted 500,000 customers from over 180 countries globally.

Compliance has always been a problem for digital assets exchanges. To handle this issue, BitMart registered as an MSB (Money Services Business) in the U.S. on April 30, 2018, and is qualified to conduct crypto-to-crypto transactions legally in most of the states.(7/10)

D. Technology

The security of users’ assets is the biggest concern faced by every exchange. In the real world, security incidents also occur frequently. The technical strength of an exchange can be directly learned from several factors, such as transaction confirmation speed and the amount of lag. The platform of BitMart has adopted the self-developed, high-performance core matching engine and made full use of distributed computation, such as Google Spanner and BigTable. It supports large amounts of concurrent computation and can handle maximumly millions of transactions per second. In addition, BitMart also has a flexible and dynamic application container framework. The Kubernetes scheduling technology employed enables the system to adjust the service capacity automatically according to the load. BitMart can maximumly afford tens of millions of users at the same time while guarantees a smooth user experience to the utmost.

As for the security issue, BitMart has adopted an advanced multi-layer and multi-cluster system architecture to ensure the high performance, security, stability and scalability of the system. It applies both cold/hot wallet technology, with NetGap technology being used by hot wallet. The operating modes of keys and addresses are optimized according to the features of the blockchain nodes to ensure the asset security. Moreover, BitMart has partnered with SlowMist and Certik to strengthen the security.

Of course, the security issue of an exchange is always a black box for its users. We can only know the true risk resistance capacity of an exchange when it is attacked. Only exchanges able to offer long-term stable services after a number of hack attacks can gain the trust of users. (6.5/10)

E. Team

Currently, BitMart has a team of 70 people, with 40 in its technical team, 25 in the marketing and product designing team. The other 10 comprises lawyers, HR and financial staff. The team is well organized, highlighting the technical development and compliance issue.

Sheldon Xia, CEO, entered the blockchain industry in 2013. Sheldon launched DSCOIN and founded an exchanged as well. Both CTO and CIO previously worked at Lianlian Payment. The team’s executives all have relevant experience in their respective fields and have served as middle-ranking cadres. The advantage is that the experience of the members helps lay a solid foundation for the project to facilitate its progress in a robust manner.

According to BitMart’s website, it has 15 advisors. Unlike some projects that only prefers well-known advisors, BitMart has invited experts in the fields of media, law, financing and etc.

According to BitMart’s website, it has 15 advisors. Unlike some projects that only prefers well-known advisors, BitMart has invited experts in the fields of media, law, financing and etc.

F. Ecosystem

For exchanges, community development is of great importance as users serve as the cornerstone of its success.

Currently, BitMart has opened accounts on mainstream social media platforms like Facebook, Twitter, Telegram and Reddit. It has 10,245 followers on Facebook and 33,500 followers on Twitter. In addition, BitMart owns 12 Telegram groups in different languages. The most popular one is the English group, with 19,780 members. Overall, BitMart is gaining popularity slowly.

Source: Trackico

So far, BitMart has conducted various marketing activities, such as festival themed events, Mission X and supporting competitions or airdropping activity. This is also the typical approach for most exchanges.

According to SimilarWeb, BitMart has attracted 449,300 monthly visitors in 2019. The figure remains stable in the past 5 months, without being affected largely by the down trend of the digital currency market.

We compared the search volume of BitMart, Huobi OKEx and found that there is still a considerable gap between BitMart and the other two exchanges. We skipped the data of Binance because the search volume is too high to be used for reference.

Generally speaking, platform coin is only listed and traded on its own platform. Only some well-developed coins will be listed on other exchanges, such as BNB, OKB and HT. This is because the high volume of these coins can bring more traffic to other exchanges. In turn, listing on additional exchanges can improve the external liquidity and popularity of the coins, forming a positive feedback. For the time being, BMX is only traded on BitMart, like other medium-sized exchanges. The number of exchanges on which a coin is listed is also a side indicator of the influence of the exchange.

G. Conclusion

BitMart has adopted the conventional mode of centralized exchanges and are achieving steady progress in several aspects including products, marketing and operation. On this basis, the operational data is also quite stable, which is not easy for an exchange launched in the end of the last bull market. It also indicates that instead of making quick money, the project has established a long-term strategy. Although the functionality of the platform token is unremarkable, the data regarding the BMXs destroyed in the long term shows its high development capacity and stable income. Currently, the project seems to have the potential to develop in a sustainable manner. But it is important to note that if the bear market worsening, it may not be able to survive and lack more funds for expansion.

Hype Score: medium

Risk Score:Medium

Expectation:Medium

Total Score: 6.9

All information in this article is provided for reference only and does not constitute investment advice.


For more reviews and information,please visit https://evaluape.io/share to download EVALUAPE APP.

About us

EVALUAPE is a platform for demonstration and evaluation of blockchain projects. We provide comprehensive database and professional evaluation of global blockchain projects with our extensive experiences, while adhering to the values of community culture, ultimately decentralizing the platform. We desire to become an international, professional and remarkable project evaluation platform.