What Should You Track? Key Metrics for Cryptocurrency Exchange

Hi, learned something exciting today? If not this could make the answer different.

This post is for those who are particularly working for a cryptocurrency exchange or trading platform and could be also inspiring if you are in any kind of financial exchange/trading company.

A Growing Financial Product

So as the trend goes with the dramatically increased interests and investment in Bitcoin (BTC), Ethereum (ETH), Ripple (XRP) and other type of blockchain based digital assets over these years, a huge number of cryptocurrency exchanges thus came to the market providing buy and sell services to users (check them out here on CoinMarketCap). 

A Cryptocurrency Exchange Dashboard

So,

How can you tell it did a good job providing service for traders?

How do you know it is growing well, so is the company who is standing behind it?

How will you approach to improve and win over your competitors?

You may not know or have some ideas like trading volume, number of users, popularity over the social networking, etc. Yes, indeed, they are so-called metrics or KPIs for companies to follow up and define the success of business. But is this the whole story? How do you know you don't miss anything critical?

Key Metrics to Track

Here's a step-by-step analysis of what "Key Metrics" you need to track for cryptocurrency exchange, which may help you get there as "things on track".

Before it goes, there are something needs to be clarified.

• Metrics. Usually "Metrics" means the figures and measurements that explain what's going on with product. Here it means that meaning plus something not quantitative but qualitative like feature or uniqueness.
• Users. Typically there are two types of users. Market Maker, the institutional or bigger players who provide liquidity to the market, or to make it easier, open large amount of orders there and wait to be traded, and Market Taker, usually the general individual users who consume the liquidity or we can say "eat" those open orders.

And here we go.

Different industry or business has some metrics that are relatively more important than others. So we are gonna categorize them by different characters of industry or business.

Product General

Life Time Value (LTV).

Life Time Value (LTV) refers to how much revenue does each user generate on average over a period of time. Here due to the business modal of exchange, there are two types of fees that user contribute directly: Order Fee and Withdraw Fee. 

Order Fee or sometimes called Transaction Fee is the charge on each successful execution of users' order or transaction. Withdraw Fee is the charge on each withdraw transaction of users' assets no matter it's a fiat money withdraw or cryptocurrency transfer. For a crypto transfer, usually there is a fee given to miners, which does not count in such situation since miner's profits is not exchange's profits.

Uniqueness.

Sometimes it could be right the killer feature against all other competitors! This is something that shows up how different your product is compared with other competitors. Of course the distinctions should be advantages rather than drawbacks. An outstanding UI/UX and brand new also efficient usage flow, a set of professional and flexible alerts, a top notch secure solution and makes customers trust in, they can all be the key qualitative indicators to keep an eye on and keep growing.

Financial Exchange Product

Trading Volume (TV).

It means the amount of crypto being bought or sold during certain period of time. This is one of the most important metrics as it directly tells you how "big" the platform is and much revenue it can get cause usually higher volume means more users or more powerful the users are.

Market Pairs (MP).

It's the number of Market Pairs provided by an exchange. More pairs usually means it's more attractive to those who pick a wide range of cryptocurrency selections as their portfolios in order to mitigate the risks on each asset.

Characters from E-commerce Platform Product

Acquisition - Cost Per Click (CPC).

Cost on paid ads divided by number of clicks from users. If the exchange paid money to conduct digital marketing over the Internet, then this is a pretty general metric just like that in E-commerce industry. It shows how much the company spent in order to acquire potential customers.

Applying to the similar approach, thus we have Cost Per Registration (CPR), cost per registered user (and in cryptocurrency exchange case, it contains passing the KYC check which user fills in very detailed personal information in order to trade) and Cost Per First-time Trade (CPFT), cost per user who at least traded once.

Conversion Rate.

Conversion Rate by Origin Source, % of users engage with product by different way of marketing promotion/ad. And Conversion Rate by Device Type, % of users engage with product by device type such as browser, iOS App, Android App, mobile browser, etc.

Average Order Volume (AOV).

How much volume does each user trade on average over certain period of time.

Comparably, you have an "average" metric over a group of samples, you also need to have "median" metric. Median Order Volume (MOV), the median volume that user trades over certain period of time. This is to indicate whether the platform consists of only a few big players and all the rest are just really small, only-one-or-two-order traders, or a major proportion of users whose contribute volumes are not so different. Or some times we call it Fragmentation. Higher fragmentation means more users are doing less while the lower fragmentation means a few users doing a lot.

Characters from Marketplace Platform Product

A marketplace platform is a place that usually has dual sided customers. In cryptocurrency world, it's right the market maker and market taker.

Market Maker Liquidity (MML).

The average order volume over certain period of time opened by market makers.

Market Taker Liquidity (MTL).

The average trading volume over certain period of time executed by market takers.

Characters from Mobile App Product

The most important metrics for mobile apps are usually about user retention as referring how frequent users engage with the service.

Daily Active Users (DAU).

It means how many users actively use your product daily. Similarly, Monthly Active Users (MAU) refers to how many users actively use your product monthly.

Conclusion

Cool, you've come to this far! So is your company or team tracking those metrics above and clear about the situation compared with your competitors? If not, it's time to add them to the TODOs.

Will keep updating the metrics. Comments and suggestions are welcome.