Crypto exchanges have been facing increasingly difficult times recently. User growth is stagnating, profits are declining, and several major platforms have even shut down. What’s behind this turmoil in the formerly high-flying crypto exchange industry? And what does the future look like for these crucial gateway platforms into the crypto economy? Read on to find out.
Acquiring New Users is Getting Harder
In the bull market heydays of 2020-2021, crypto exchanges had no problems attracting droves of new users looking to get in on the hot crypto action. However, as prices have crashed and crypto mania has dissipated over the last year, user growth at exchanges has slowed to a crawl.
Exchanges are having to spend more and more on marketing and promotions just to acquire each new user. Average customer acquisition costs have ballooned to an eye-watering $25-30 per user. And even then, the users they do acquire are often low-value “newbies” just dipping their toes into crypto for the first time, rather than active traders.
Retaining and Engaging Existing Users
Making matters worse is that existing users are becoming less active on exchanges. Visits and trading volumes continue to decline in the crypto bear market. Users nowadays often only log into their exchange accounts once a week or less to briefly check up on their portfolio.
Exchanges pour huge sums into operations, technology, customer support and other resources to serve users. But with user activity and engagement falling, it’s harder for exchanges to earn back those investments.
Even users who do actively trade often make mistakes like over-leveraging themselves on futures trades, wiping out their capital in one fell swoop. When users lose everything, they usually withdraw from the exchange altogether.
Catastrophes Rock the Crypto Industry
On top of all that, a string of catastrophes over the past year – from the Terra USD stablecoin collapse to the FTX implosion – has shattered user trust and depressed trading activity industrywide.
Each crisis seems to hit more exchanges in its wake. At this point, there are more defunct exchanges like Voyager and Celsius than surviving ones. And many still-operational exchanges are struggling financially. They have to keep making markets so users can trade, even when volumes and profits are dwindling.
ALSO READ : CoinDCX x Kandle Partnership: A New Era of Crypto Gaming in India
The Path Forward – Gamification
So what’s the path forward for crypto exchanges suffering from low user retention, engagement and trust? One promising avenue is gamification. That’s where exchanges incorporate fun, rewarding games and activities into their platforms.
Just look at an example outside crypto – Amazon added a free games section inside its shopping app to drive more frequent usage and engagement. Crypto exchanges could take a page from this playbook. Specifically, they can look to partner with crypto gaming platforms like Kandle.
Kandle offers a suite of crypto games perfectly tailored for exchange users, including fast-paced trading battles, portfolio competitions, price prediction contests and more. These games entertain and incentivize users to stay active on exchange apps.
For instance, Asian exchange giant CoinDCX recently integrated Kandle games into its platform to boost lagging user activity. Games like Predict 2 Win, Coin Leagues and High Low have proven effective at sustaining engagement among CoinDCX’s user base.
The CoinDCX case demonstrates crypto games’ potential to alleviate exchanges’ user retention woes. As the exchange landscape evolves, gamification could make the difference between the platforms that survive and those that don’t. Exciting new gameplay may just be the key to recapturing users’ interest during these crypto winter months.
So for crypto exchanges struggling to prosper, games like the ones Kandle provides could offer a lifeline through the industry storm. Gamification helps exchanges stand out from the pack while making their apps “stickier” and more engaging for users old and new alike.
