For the first time in Iran, we in Coiniran conducted a research project to evaluate the quality of Iran based crypto exchanges. The fact that Iran is among the young and most academically educated countries of the world, plus economic instability and American Financial sanctions, makes Iran an important Market for mining and trading activities. Crypto interests are rising in the country and hundreds of thousands of citizens are holding some sort of cryptocurrencies. Unlike almost all countries of the world, crypto users in Iran are not able to use global exchanges for their trading activities.
In 2017, Bittrex deactivated its Iranian users’ accounts. Although later in 2019, the American exchange gave the frozen assets back to its Iranian users, the harm was as huge as the market crashed and the users were not able to manage the portfolios. Bittrex was not the only platform that suspended Iranian accounts. In May 2019, peer-to-peer cryptocurrency exchange LocalBitcoins banded users living in Iran and since then, almost all spot exchanges around the world are not willing to provide financial services for people living in Iran.
The Impossibility of working with global exchanges plus the growing rate of people investing in digital assets provide a proper situation for the spring of local crypto exchanges. Today several local platforms are hosting millions of dollars of Iranian funds. These intensify the necessity of creating a well-designed framework for analyzing exchanges locally. This is through competition and transparency that a market improves and we strongly believe this research will increase competition among exchanges and also help users to better choose their trading platforms.
As the result, the first Iranian crypto exchange benchmark reveals in a time when lack of a protection bill and diversity of trading platforms concern the Iran Crypto community. In this research, we analyzed four major Iranian Crypto exchanges in regards to a variety of metrics. From operational performances to the level of security they provide, we tried to deploy all possible insights including qualitative and quantitative metrics to better evaluate the quality of trading platforms. We chose four exchanges because we do believe that not all trading platforms are deserved to be called a crypto exchanges.
At first glance, one may say that the bigger the exchange volume is, the better the quality of its services. In this study, we assumed that there are some other metrics besides trading volume which can help us better evaluate the quality of exchanges. There is no doubt that trading volumes and liquidity can be easily manipulated. Regarding that, we tried to evaluate all exchanges based on the quality and trust in their services. Thus, we designed 60 different metrics that fall into 10 main categories. From analyzing user experience to the security level of each service, we tried to consider all possible insights that can help us examine the values of each platform more accurately.
We think this research will help both Exchanges and their users as Exchanges can understand industry trends and areas for competitive parity and users would identify the best venues for their risk appetite. It can also be beneficial for big investors to assess opportunities and risks in the Crypto asset market as well as Regulators who are looking to develop new policies.
During the study, we conducted several surveys to understand what percentage of our audiences uses local exchanges and how trading looks like in these platforms.
The result shows that only 16 percent of our audiences use Iranian exchanges. Despite all financial limitations, it seems that most Iranian users tend to use global exchanges.
Then we asked how satisfied they are with local trading platforms.
Although most of the participants were satisfied with working with local exchanges, 18 percent of them were very dissatisfied.
We continued our study to figure out the reason why most Iranians use global exchanges. In another survey, we understood that the costs of trading in Iranian platforms are the main reason why some participants are not satisfied with their experiences. The graph below presents how our audiences find the costs of trading in local exchanges.
The result proved our previous assumptions. 81 percent of participants taught that trading in these platforms is pricy. We believe this could be the main reason why most of the Iranian users prefer to work with global exchanges.
Volumes and liquidity can be easily manipulated by exchanges. We developed 10 different metrics along with volume and liquidity to produce a more reliable assessment of local exchanges. We developed our metrics based on the works of past studies and our researcher experiences. To use our audience’s insights in our evaluation, we conducted another survey in which we tried to determine subsequent weightings of our main metrics.
In this survey, we put our main metrics into distinct items and asked our participants to choose what is more important to them. Our participants were able to choose multiple items. The following graph represents the distribution of the participant’s answers.
The result shows that security and the quality of the exchange market are the most important concerns of Iranian users.
Our first designed exchange Benchmark is backed by hundreds of research hours. We try to adopt an innovative methodology to analyze exchanges through a combination of 60 different qualitative and quantitative metrics without using volumes directly. We assign each exchange a grade (A*, A, B*, B…) based on its total cumulative score out of 100. We believe this will help identify the most reliable exchanges in the industry.
Each metric is converted into a series of points based on clearly defined criteria. To ensure not one metric over influences the overall ranking, Metrics were categorized into 10 buckets and distributed fairly to arrive at a final score.
To collect data accurately, we use a verity of resources including the World Bank, transparency international, LinkedIn, and GitHub, exchanges websites as well as company’s houses and media websites. We appreciate that certain data points might be incomplete due to lack of public availability but we have made our best effort to collect more trustable data.
The overall ranking consists of the following components and subsequent weightings.
The Maximum score here is 100 but there are also three extra criteria where exchanges may lose 5 or gain 10 extra scores subject to the following table.
At the end, we grade all exchanges based on their accumulative scores and the table below.
All of our components consist of several metrics. In this section, you will find all these metrics and the result of our study for Iranian Crypto exchanges.
Our first insight is Legal. We developed nine different metrics to better examine exchanges in terms of their legal compatibility. The Graph below shows our legal metrics and their subsequent weightings.
Here is the result of our study for these four exchanges.
Security branches on crypto exchanges are alarmingly common. Exchanges are key targets for hacking attacks. In order to evaluate the level of security exchanges provide for their users, a series of metrics were developed. Here you can see our high-level security metrics and their weight coefficient.
This is the result of our study for Iranian exchanges.
An application programming (API) is a computing interface that defines interactions between multiple software intermediaries. For crypto trading an API allows you to connect with your exchange and have access to real-time market data. We developed 9 metrics to better analyze the quality of the API of each exchange.
Here is the result of our investigation.
In order to provide a representative picture of what trading looks like in these exchanges, five different metrics were developed. Our try here is to identify exchanges that behave differently from the expected normal.
And the result is as follow.
Tarde and investment
Exchanges may use the services of trade surveillance providers to monitor suspicious activities. We believe that these exchanges are more transparent and able to identify any illegal trading. Moreover, some exchanges may have some big companies as their financial investors. In this section, we assume that these exchanges have more resources to develop and improve their financial products. In the first table, you can see how we score exchanges based on their trade monitoring mechanism.
|External trade surveillance||66|
|Internal trade surveillance||37|
And in the second table, you see how different types of investors are important for our study.
|Banks and financial institutions||66|
|Small firms and corporations||37|
Finally here you can find the result of the analysis for these criteria.
The quality of the executive management team and their level of transparency can bring us to understand how well an exchange is managed. We developed five metrics and analyzed all exchanges based on the assumption that the more transparent and experienced/educated and exchange’s executive team is, the higher the quality of the exchange.
And the result is as follows.
The User experience here is a user emotion and attitudes about working with one exchange’s platform. It generally includes a user’s perceptions of systems aspects such as utility, ease of use, and efficiency. We designed seven metrics to better evaluate the quality of working with these platforms.
And in this section we score all exchanges based on the accumulative score they acquire.
Exchanges implement various incentive schemes to attract more users or raising the profile of the exchange. We believe that the presence of any incentive scheme does not necessarily imply a lower or higher quality exchange. As the result, we provide and independent ranking for trading incentives.
And our independent ranking for the incentive scheme exchanges offer is as follow.
In the end, we grade all exchanges based on their accumulative scores. In this study, 80 different metrics fall into 10 main categories to produce a more reliable assessment. All metrics were studied independently as we believed not one metric, like volume or liquidity, can qualify one exchange. We think this research will help both exchanges and their users as exchanges can understand industry trends and areas for competitive parity and users would identify the best venue for their risk appetite.
Coiniran aims to update this Exchange Benchmark regularly. The research team hopes to have your criticism and recommendations. We believe your suggestions will help us to continue to improve the quality of our investigations.
Please ask your questions and share your opinions with the head of the research team: Salli@coiniran.com
If you are an exchange and want to be evaluated and then placed in our ranking send your request to Support@coiniran.com