How Exchanges Make Profit?

When a project launches an ICO it gets a lot of money. That money is later used to build the project and hire some people that will work on the project in order for it to be successful. What usually happens, ICOs get under a lot of pressure from the investors who put the project on a list of a major exchange. These investors are not really into the business because of the project but because they get high discounts for monetizing their gains.

New ICOs actually need money and can’t say no to people like these so they get easily tricked in a way to later sell the project as soon as they possibly can so they can make a quick profit. Also, ICOs pay huge fees to be enlisted on a popular exchange. Major exchanges require that you provide certain services or better known as market makers. These entities make sure that their company lists as much as 10 buy orders and 10 sell orders on an exchange. Next, market makers make sure to prove there is a lot of activity on the market and generate high volume appearance. Of course, these services are not for free. The services are also not cheap. Because the exchanges see the high trading volume they are always one step ahead.

For example, Binance plans to make a yearly profit of $1 billion and that money will eventually be collected from ICOs by making them pay enormous fees. There will, however, be new exchanges that will be smaller and have fewer fees and be cheaper for users and hopefully won’t take advantage of the newly emerged projects.