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How do you lose so much money when your business it to charge fees? You'd have to do something really stupid to not make money.

janejeon 4y ago
It's really weird, because "typical" exchanges (NYSE, NASDAQ, CME, etc) typically charge like, what, a few basis points to trade? Coinbase is charging .60%, an order of magnitude of higher fees, and yet they're still somehow losing money?
CydeWeys 4y ago
Well for starters they have over a thousand employees, plus office leases, plus I'm sure cloud provider fees, marketing, and more. There are expenses for sure.
- kevinak 4y ago
  It's definitely strange. Binance did $40 billion in volume in the last 24 hours. Even if their effective fee is only 1/100 of a percent that's $4 million. If we assume they do half that volume every day on average that's 730 million in revenue per year. Surely costs can't be that high?
  - kijin 4y ago
    Depends on how extravagant they are with executive bonuses, employee perks, fancy offices and cloud resources.
  - omgomgomgomg 4y ago
    I have calculated salary costs alone to be 30m a month at least. Could also be up to 80m, though, I have used the most conservative calculation I could reasonably come up with. Then comes office infrastructure, if any and cloud assets.
    - vineyardmike 4y ago
      They publicly disclose this info ;) They have >4k employees. Assuming they make US minimum wage, they would cost almost 240,000,000/yr. It’s almost certainly MUCH higher. They spend $550b a quarter on R/D. That’s likely mostly salary. https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3/Q32022-Shareholder-Letter.pdf https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3...
      - taspeotis 4y ago
        > They spend $550b a quarter on R/D. That’s likely mostly salary. What does b stand for again…
        vineyardmike 4y ago
        Billion?
        taspeotis 4y ago
        And how many quarters in a year? 550 billion * 4 quarters = 2.2 trillion dollars in R&D each year...
  - dmitriid 4y ago
    > Binance did $40 billion in volume in the last 24 hours. It didn't > Even if their effective fee is only 1/100 of a percent that's $4 million. It's not. The reason? They "traded" fictitious currencies whose "value" is pure speculation and nonsense. Their fees are also denominated in these fictitious currencies. However, neither the offices they rent nor the people they employ have any interest in these, because rent and salaries are paid in something that actually has value: the dollar. Now, where does the actual money come from is a good question, but I'm too lazy to read their SEC filing.
    - sudosysgen 4y ago
      If there is enough volume in these trades to make appreciable fees then there is enough to continuously sell it.
    - tiarafawn 4y ago
      > because rent and salaries are paid in something that actually has value: the dollar. In 2018, 90% of employees received their salaries in BNB https://www.ccn.com/90-of-employees-at-major-crypto-exchange-binance-receive-salary-in-bnb/ https://www.ccn.com/90-of-employees-at-major-crypto-exchange...
      - coffeebeqn 4y ago
        Wow company scrip is back
        aorloff 4y ago
        Gonna be tough motivating the troops !
      - dmitriid 4y ago
        Those employees have to eat and pay rent. None of that is in BNB. Given their "grossly inaccurate filings" I wouldn't trust random tweets https://www.ft.com/content/3fb2f6cf-e132-43f4-9d6a-34fd13eb8991 https://www.ft.com/content/3fb2f6cf-e132-43f4-9d6a-34fd13eb8...
  - vineyardmike 4y ago
    https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3/Q32022-Shareholder-Letter.pdf https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3... They had $365mm in revenue from transactions. They has $1.1b in expenses. $550mm is employee/r&d.
jacquesm 4y ago
Everything you hold a position in translates into risk on the books. If some of those positions (or even a majority of them) ends up losing you will need to make up the difference. On top of that KYC and other operational costs really add up, and without another revenue stream than the transactions themselves it may simply not be enough of a slice to be viable.
jcampbell1 4y ago
Coinbase is like an empty casino with lots of employees, a solid vault, and no one at the table games. Binance is like a packed casino with few employees and about as transparent as mud.
vkou 4y ago
It's easy. If you give me custody of a billion dollars, I will immediately fly to Vegas and put it all on red. If I win, I keep the money. If I lose... You'll have a problem a few years down the road, when you try to withdraw. Every one of the allergic-to-sunlight exchanges has a huge incentive to do what I described.
thrashh 4y ago
They’re spending a lot on R&D and staff They were making money with the current amount of spending but then crypto flipped They probably will have to lay off more people and give up on their current pace of development. Tickets will take 5 months to complete instead of 2
nly 4y ago
Volume has been sucked out of the markets throughout 2022. Prop trading firms are suffering in the stock market for the same reason

janejeon 4y ago

It's really weird, because "typical" exchanges (NYSE, NASDAQ, CME, etc) typically charge like, what, a few basis points to trade? Coinbase is charging .60%, an order of magnitude of higher fees, and yet they're still somehow losing money?

CydeWeys 4y ago

Well for starters they have over a thousand employees, plus office leases, plus I'm sure cloud provider fees, marketing, and more. There are expenses for sure.

kevinak 4y ago
It's definitely strange. Binance did $40 billion in volume in the last 24 hours. Even if their effective fee is only 1/100 of a percent that's $4 million. If we assume they do half that volume every day on average that's 730 million in revenue per year. Surely costs can't be that high?
- kijin 4y ago
  Depends on how extravagant they are with executive bonuses, employee perks, fancy offices and cloud resources.
- omgomgomgomg 4y ago
  I have calculated salary costs alone to be 30m a month at least. Could also be up to 80m, though, I have used the most conservative calculation I could reasonably come up with. Then comes office infrastructure, if any and cloud assets.
  - vineyardmike 4y ago
    They publicly disclose this info ;) They have >4k employees. Assuming they make US minimum wage, they would cost almost 240,000,000/yr. It’s almost certainly MUCH higher. They spend $550b a quarter on R/D. That’s likely mostly salary. https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3/Q32022-Shareholder-Letter.pdf https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3...
    - taspeotis 4y ago
      > They spend $550b a quarter on R/D. That’s likely mostly salary. What does b stand for again…
      - vineyardmike 4y ago
        Billion?
        taspeotis 4y ago
        And how many quarters in a year? 550 billion * 4 quarters = 2.2 trillion dollars in R&D each year...
- dmitriid 4y ago
  > Binance did $40 billion in volume in the last 24 hours. It didn't > Even if their effective fee is only 1/100 of a percent that's $4 million. It's not. The reason? They "traded" fictitious currencies whose "value" is pure speculation and nonsense. Their fees are also denominated in these fictitious currencies. However, neither the offices they rent nor the people they employ have any interest in these, because rent and salaries are paid in something that actually has value: the dollar. Now, where does the actual money come from is a good question, but I'm too lazy to read their SEC filing.
  - sudosysgen 4y ago
    If there is enough volume in these trades to make appreciable fees then there is enough to continuously sell it.
  - tiarafawn 4y ago
    > because rent and salaries are paid in something that actually has value: the dollar. In 2018, 90% of employees received their salaries in BNB https://www.ccn.com/90-of-employees-at-major-crypto-exchange-binance-receive-salary-in-bnb/ https://www.ccn.com/90-of-employees-at-major-crypto-exchange...
    - coffeebeqn 4y ago
      Wow company scrip is back
      - aorloff 4y ago
        Gonna be tough motivating the troops !
    - dmitriid 4y ago
      Those employees have to eat and pay rent. None of that is in BNB. Given their "grossly inaccurate filings" I wouldn't trust random tweets https://www.ft.com/content/3fb2f6cf-e132-43f4-9d6a-34fd13eb8991 https://www.ft.com/content/3fb2f6cf-e132-43f4-9d6a-34fd13eb8...
- vineyardmike 4y ago
  https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3/Q32022-Shareholder-Letter.pdf https://s27.q4cdn.com/397450999/files/doc_financials/2022/q3... They had $365mm in revenue from transactions. They has $1.1b in expenses. $550mm is employee/r&d.

jacquesm 4y ago

Everything you hold a position in translates into risk on the books. If some of those positions (or even a majority of them) ends up losing you will need to make up the difference. On top of that KYC and other operational costs really add up, and without another revenue stream than the transactions themselves it may simply not be enough of a slice to be viable.

jcampbell1 4y ago

Coinbase is like an empty casino with lots of employees, a solid vault, and no one at the table games. Binance is like a packed casino with few employees and about as transparent as mud.

vkou 4y ago

It's easy. If you give me custody of a billion dollars, I will immediately fly to Vegas and put it all on red. If I win, I keep the money. If I lose... You'll have a problem a few years down the road, when you try to withdraw. Every one of the allergic-to-sunlight exchanges has a huge incentive to do what I described.

thrashh 4y ago

They’re spending a lot on R&D and staff They were making money with the current amount of spending but then crypto flipped They probably will have to lay off more people and give up on their current pace of development. Tickets will take 5 months to complete instead of 2

nly 4y ago

Volume has been sucked out of the markets throughout 2022. Prop trading firms are suffering in the stock market for the same reason