Kucoin Exchange — Kucoin Token Value Breakdown
What is the Kucoin Exchange:
The Kucoin Exchange is an Asian exchange that has, following tightening regulations, expanded into international markets. They recently released their stylized whitepaper on their telegram announcement channel. I have hosted a copy of the whitepaper available here.
- The registration link is a referral of mine but it has no negative impact on your account and would be greatly appreciated. I also plan to distribute rewards to the community if I were to make one (more on that at the bottom).
What makes the Kucoin Exchange unique?
Beyond claiming it has state of the art technology and security behind their exchange, they have some interesting features:
- It is one of two exchanges that I know of that have a related token with the other being Binance.
- It has a referral plan to attract new users, while this can usually be seen as a negative, in the case of a platform such as an exchange this is a very great business feature.
- It plans to distribute funds to its token holders, more on that later.
- In the future we may see automatic or community run addition of new token pairs, which if pulled of correctly would be a major plus side for the exchange.
While the features listed above are great and all, it would be generous to call this exchange revolutionary. But not all great products have to be revolutionary.
Where do Kucoin Shares fit into the equation?
Kucoin Shares are an ERC-20 token backed by the site and the profits it generates. While we will go into the profit potential later on, the only guarantee in terms of profit distributions is that 10% of the exchanges profits will be used for the buyback and destruction of tokens. All other bonuses I believe are up for debate and review.
While the 10% buyback is a given, here are some of the possible additional features:
Receiving the Kucoin Bonus: By holding Kucoins users receive daily payouts as a percentage of the fees generated by the exchange. At the moment 50% of the fees are used to payout holders, but as said in the whitepaper this can be subject to change. However, they guarantee that only ever 100 Million tokens will be considered for the payouts and I assume members of the public will be give the priority here.
Trading Fee Discount: Soon you will be able to, much like Binance, receive a discount on your exchange fees by holding Kucoins. However, in the case of Binance your Binance balance is used to pay the fees, whereas your Kucoin Shares simply grant you the discount based on how many you hold in the exchange wallet. This means your tokens will not be used to pay when you make trades on the exchange.
Exclusive Rights & Decentralized Exchange: Kucoin plans introduce exclusive rights to users that hold significant amounts of Kucoin. Also, similar to Binance they plan to run a decentralized exchange where their currency will act as gas for the platform.
I hope the story so far has given you a decent insight into the Kucoin project, for more information on the technical aspects I recommend taking a look at the whitepaper. In the following section I will get into some of the numbers and look potential earnings for Kucoin holders.
To earn rewards from your KCS (Kucoin Shares) they must be on the exchange wallet. Register here.
Kucoin Shares: Potential Returns
At the moment Kucoin’s 24 Hour trade volumes are above $500'000 USD per day. While this certainly is a respectable number, there is plenty of work to be done and room to grow. Comparing Kucoin with another decentralized exchange, Coss.io, we see they both experience similar trade volumes and have the majority of their trades coming from their own tokens. While have your own token as your most traded is not a good thing, it most certainly is to be expected in the early stages of these two exchanges.
Edited: Volume has spiked to $4 Million Daily, giving the following returns:
- $ 1,460,000 USD generated per year in fees.
- $ 730,000 USD paid out as bonuses
- A stack of 100 KCS would net you 73c in bonuses.
- That’s a current yearly return of 0.9125%.
Trade Volume Milestones:
To achieve a 5% return through bonuses, assuming bonuses, would require a daily volume of $12.5 Million USD (If you’re buying at 69c per token increase this to $17.25 Million USD). At the time of article this kind of volume would place the exchange at 26th by daily trade volume, certainly achievable.
If Kucoin were to crack top 10 exchanges and dethrone Bitstamp by boasting $140M USD in daily trades, it would return 56% of your investment in bonuses each year. That would mean a 1000 stack of KCS ($500) would pay you a cool $280 in bonuses each year.
Summary & Verdict:
I have already picked up a few Kucoins in the recent slump and am eyeing a nice entry point in the coming month. While I do have a certain degree of faith in this exchanges abilities, I would definitely label this a slightly more risky investment with the legal atmosphere surrounding exchanges.
Advice & Play:
With Kucoin to be the first to list Red Pulse and their massive burst in exchange volume I would probably purchase KCS up to 80c USD. After that point it may be better to re-evaluate and monitor the exchange. Since the writing of this article this exchange has repeatedly impressed and suprised me, the above writing may not reflect this completely as it is slightly older. I do recommend signing up on their website and taking a look at some of their news post. Also KCS Coinmarketcap listing is confirmed to be right around the corner!
In case you missed it throughout the article, here is a registration link. The link is a referral link and it comes at no cost to you. I have plans to distribute some of the rewards if I ever make a Discord / Telegram so you have that incentive I guess :P
Please comment spelling errors, poor grammar, bad maths and abuse below. I’ll do my best to respond to, and fix the issues asap :)
Update 1 (24/10/2017): Updated daily volume values and thus calculations. Kucoin Exchange listed on CMC (https://coinmarketcap.com/exchanges/kucoin/) and the numbers don’t include their most traded KCS pair.