- What is Binance, and how does Binance work?
- How does Binance make money?
- Trading Fees (Binance Exchange Fees)
- Transaction Fees (Binance NFT Marketplace)
- Capital Gains From Investments (Binance Labs)
- Interchange Fees (Binance Visa Card)
- Binance subsidiaries, acquisitions, and exits
- Binance profit and revenue
- What is the Binance business and revenue model?
- Binance funding, net worth, and valuation
How does Binance make money? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Binance business and revenue model, how much Binance makes per year, and how Binance works.
What is Binance, and how does Binance work?
Binance is a cryptocurrency exchange platform to buy, sell, and trade more than 600+ cryptocurrencies like BTC, ETH, USDT, USDC, DOGE, and SHIB.
Founded in 2017 by Changpeng Zhao, Binance now has more than 90 million registered users and handled roughly $7.7 trillion of exchange volume in 2021, making it the largest crypto exchange in the world in terms of the daily trading volume.
So, how does Binance work? To use Binance, users can first download their mobile app in the Apple App Store or Google Play store; or visit their website and sign up for an account
Once an account is created, users can buy and sell from more than 600 cryptocurrencies, as well as search for, track crypto prices, and more.
How does Binance make money?
According to Binance, the company now has more than 90 million registered users on its exchange and handled a reported $7.7 trillion of exchange volume in 2021.
So how does Binance make money off of all those registered users and exchange volume?
Below is a breakdown of how much money Binance makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 4 ways of how Binance makes money in 2022
Binance has a revenue model that makes money in four (4) ways; through NFT transaction fees, trading fees, capital gains from Binance Labs investments, and interchange fees from their Binance debit card.
#1. Trading Fees (Binance Exchange Fees)
As like any exchange, Binance makes most of its money from its trading fees from the trades performed on its exchange platform.
Binance uses a maker-taker fee model which is commonly used on cryptocurrency exchanges. And how they determine how much to take per trading transaction is determined by the users’ fee level (there are 9 VIP levels + “Regular User”). Their fee level is based on the users’ last 30 days of trading volume and is calculated in BUSD, Binance’s USD. 1 BUSD is equivalent to $1 USD.
In short, the more a user spends on the exchange, the lower their fees are.
On Binance, they have three (3) types of trading; spot trading, USDS-M futures trading, and COIN-M futures trading. All of which have their own set of trading fees.
For example, we will use their Spot Trading fees: A Regular User is an account with a 30-day trading volume of less than 1,000,000 BUSD ($1 million USD) where a user is charged 0.1%. VIP 9 is a 30-day trading volume of $5 billion+ USD where a user is charged between 0.02% to 0.04%. And then there is everything else in between.
You can see all 9 VIP levels of 30-day trading volume with fee breakdowns, here. You can also see the simplified version below.
Binance trading fees:
- Maker fee: 0.02% to 0.1%
- Taker fee: 0.04% to 0.1%
Note: Binance collects fees from both buyers and sellers.
#2. Transaction Fees (Binance NFT Marketplace)
Binance branched out into the NFT space by introducing its own NFT Marketplace in June 2021.
So, how does Binance make money from NFT sales? Binance makes money by collecting a number of fees every time an NFT is minted and or sold on the Binance NFT Marketplace. You can see how much the fees are below.
Binance NFT Fees:
- Platform fees: 1% flat fee every time an NFT is sold on the Binance NFT Marketplace
- Minting fees: 0.022 BNB minting fee for each NFT minted on the BNB Smart Chain (BSC), and a 0.012 ETH minting fee for each NFT minted on Ethereum
#3. Capital Gains From Investments (Binance Labs)
In 2018, Binance expanded its business into the venture capital sector with Binance Labs.
Binance Labs is a $500 million investment fund that invests in blockchain entrepreneurs and startups by financing industry projects that help grow the blockchain ecosystem and decentralized web. Which has currently made 64 investments at the time of writing this.
#4. Interchange Fees (Binance Visa Card)
Binance also makes money off of the interchange fees they receive from the Binance debit cards they issue to users who have a Binance account, are residents of the qualified countries, and are approved.
How does Binance make money from interchange fees? Binance makes money whenever a Binance cardholder swipes their Visa issued card.
When this happens, Visa charges the merchant an interchange fee between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount. From that, Visa gives a percentage of its interchange fee revenue to Binance. Although it’s unclear what percentage Binance receives from Visa.
Binance subsidiaries, acquisitions, and exits
To date, Binance has made a total of 7 acquisitions, 23 investments, 12 lead investments, and 1 successful exit.
Binance profit and revenue
In 2021, Binance had a reported $20 billion in revenue.
Note: Because Binance is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.
What is the Binance business and revenue model?
Binance makes money through a few revenue models that they combine within their company, they are:
- Fee for service (FFS) business model
- Interest based business model
- Business to business (B2B) business model
- B2B2C (partnerships) business model
- Mergers and acquisitions (M&A) business model
Binance funding, net worth, and valuation
According to Binance’s Crunchbase profile, Binance has raised $10 million over 3 rounds.
On the other hand, its subsidiary, Binance.US, has raised $200 million over 1 round and has a valuation of $4.5 billion as of June 2022.