《Discussing the Competitive Landscape of Mid- and Low-Tier Exchanges: How Can Smaller Exchanges Survive?》

In addition to top exchanges like Binance and OKX, our market also has a number of mid- and low-tier exchanges competing fiercely.

The competitive strategies of these exchanges mainly adopt two approaches:

First, they focus on altcoins and niche trading pairs;

Second, they concentrate on contract trading to attract high-frequency traders.

Let’s first talk about the first strategy:

Top exchanges (like Binance) tend to favor mainstream cryptocurrencies, while mid- and low-tier exchanges can attract early project supporters and speculators through a combination of niche spot and contract trading.

Coins that top exchanges cannot or are unwilling to list can be listed by smaller exchanges, thus mid- and low-tier exchanges still have significant room for survival.

Now let’s look at the second strategy:

Perpetual contracts and futures trading can attract professional and high-frequency traders due to high leverage (from 50x to 200x), resulting in high trading volumes and fee revenues.

According to CoinGecko, in 2024, global derivatives trading volume will account for about 79% of the cryptocurrency market, far exceeding spot trading.

Therefore, perpetual contracts are also a key business area for exchanges in fierce competition, and many smaller exchanges primarily focus on this sector.

We can take a look at the ranking of exchanges in the contract market:

We can see that the rankings in the contract market differ significantly from those in the spot market.

Recently, there was information about the established exchange BitMart @BitMart_zh launching a slippage protection plan, compensating fully for slippage ≥ 0.05%. This activity mainly targets USDT perpetual contract traders, reducing trading risks and boosting user confidence.

BitMart's competitive approach is quite representative.

To understand this competitive strategy, we can first understand what slippage is.

Slippage refers to the difference between the actual execution price of a trade and the expected price.

The loss from slippage varies depending on the trading scale and market conditions. For small trades, slippage may result in just a few dollars lost, but for large trades or high-leverage perpetual contract trading, slippage can lead to hundreds or even thousands of dollars in additional costs.

Especially in USDT margin perpetual contract trading, due to the leverage amplification effect, the impact of slippage can be further magnified, and a small mistake can erode profits.

Many people have a misconception that slippage only exists in decentralized exchanges (DEX).

In fact, whether in the liquidity pool model of decentralized exchanges (DEX) or the order book model of centralized exchanges (CEX), slippage issues are present.

Slippage in DEX mainly arises from the depth of the liquidity pool and the price curve, while slippage in CEX is closely related to order book depth and market volatility.

For CEX users, especially perpetual contract traders, BitMart's slippage protection plan provides strong assurance, allowing traders to feel more secure through the full compensation mechanism.

Through the example of BitMart, we can see where these mid- and low-tier exchanges are focusing their efforts.

In summary: they are building a “Paradise for Altcoins” and a “Paradise for Contracts” for traders, competing on the speed of listing coins and the trading experience of contracts.

Whoever can achieve these will secure a place in the market.

We can continue to monitor the competitive situation of mid- and low-tier exchanges.