Mission Statement & Key Principles

Who Is The Exchange Benchmark For?

CCData’s Exchange Benchmark is backed by thousands of research hours and is powered by CCData’s market leading data solutions, providing the industry with a robust framework for ranking and assessing the risk associated with digital asset exchanges. The rankings in this report underpin CCData’s standard-setting aggregate index methodology, CCIX.

Exchanges

Exchanges looking to conduct a thorough competitor analysis, understand industry trends and areas for competitive parity.

Funds

Funds looking to assess counterparty risk and opportunities in digital asset markets.

Regulators

Regulators who are looking to develop
policy, or better understand the global
digital asset landscape.

Exchange Service Providers

Such as insurers, custodians and compliance services who want to gain a better understanding of the industry.

Investors and Traders

Who want to understand the risk implications of different digital asset exchanges.

Mission Statement: CEX BenchmarkCCData's Exchange Benchmark was created to bring clarity to the digital asset exchange sector, providing a robust framework for assessing the risk associated with different exchanges and bringing transparency and accountability to a complex and rapidly evolving market.Since its 2019 launch, the Exchange Benchmark has set the industry standard for evaluating the risk associated with digital asset exchanges. The methodology has since expanded, evaluating several dimensions using a comprehensive data set, covering 150+ exchanges across 8 categories.

The Centralised Exchange Benchmark now assesses the following sectors:

Centralised Spot Exchanges
Centralised Derivatives Exchanges

The Exchange Benchmark is backed by thousands of hours of research and encompasses more than 200 qualitative and quantitative metrics. Utilising an innovative ranking methodology, it combines both qualitative and quantitative metrics to assign a grade to each exchange to identify the lowest risk exchanges in the industry.

What do the grades mean?

The Exchange Benchmark ranks exchanges from AA-F. We classify a Top-Tier exchange as any in the AA-BB bracket and Lower-Tier exchanges as those graded B-F. Exchanges in the Top-Tier meet our minimum threshold for acceptable risk.

What the grading is not

This grading does not connote overall superiority, instead it represents a means of ranking exchanges according to risk. The Exchange Benchmark does not serve as a guide to which platform is superior for trading, nor the reliability of reported volumes.

Mission Statement: DEX Benchmark

Over the last four years, we have witnessed the growth of decentralised finance (DeFi). During this period, numerous protocols have emerged, enabling market participants to conduct transactions and engage in other financial activities on-chain. These activities include borrowing and lending, implementing yield strategies, using derivatives as hedging instruments, and more.

Decentralised Exchanges (DEXs) have been at the heart of this on-chain revolution and have cemented themselves as a core part of the digital asset sector. Since 2020, trading activity on DEXs has skyrocketed, in certain instances surpassing volumes of Centralised Exchanges (CEXs).

Many market participants now view DEXs as a viable alternative to CEXs with differing characteristics and value propositions. These include:

Decentralised transactions, thereby avoiding counterparty risk
No KYC/AML requirements, powering the idea of privacy in global finance
On-chain transactions, allowing for full transparency of trading ecosystems
Community-driven decision-making via governance voting
Availability of an extensive list of assets, instruments, and investment opportunities

What do the grades mean?

What the grading is not

Benchmark Scoring - Key Principles

Centralised and decentralised exchanges are inherently different marketplaces, as such, each group has been evaluated using distinct metrics. However, the framework behind each Exchange Benchmark is the same.

#1

A set of categories have been devised which represent key risk areas which are relevant for centralised and decentralised exchanges, relating to their specific value proposition. Categories have weightings based on their relative risk importance - these weightings are decided at CCData’s discretion, and may change in future editions of the Exchange Benchmark.

#2

Each category includes a range of metrics that can quantitatively or qualitatively measure the performance of an exchange. Metrics are then given points based on their importance within that category - again decided at CCData’s discretion. These are outlined in pages 20-25 and 46-49 for centralised exchanges and decentralised exchanges, respectively.

#3

Points are aggregated within each category and are then scaled to the category weighting. Each category score is summed up to reach a total score. Given the relative advancement of centralised exchanges, these have additional thresholds, which if not met, will cap the maximum score of an exchange, regardless of the total score. These are outlined on page 17. The capped score is the final score received by the exchange.

#4

Exchanges are granted a grade given their final score, ranging from AA-F. The scores required for each grade are outlined on pages 17 and 43 for centralised exchanges and decentralised exchanges, respectively. We define ‘Top-Tier’ exchanges as those attained a grade BB or higher, whereas those attaining a grade B or lower are considered ‘Lower-Tier’.

Executive Summary

CCData's Exchange Benchmark was created in 2019 to assess the risk associated with Centralised Exchanges and bring clarity to the digital asset exchange sector. Since then, the Exchange Benchmark has adapted to major structural shifts in the market, now encompassing a Derivatives and Decentralised Exchange (DEX) Benchmark.

Following the downfall of FTX in 2022 and the legal issues faced by former Binance CEO, Changpeng Zhao, who admitted to anti-money laundering violations in a $4 billion agreement with U.S. regulatory bodies, the landscape of digital asset exchanges has significantly shifted. Global regulators, cognisant of the intricacies of this sector, have enhanced their oversight mechanisms and regulations surrounding digital asset exchanges has become more stringent in numerous jurisdictions.

The April 2024 Exchange Benchmark reflects this, with updates to the methodology, ensuring exchanges are held to the highest standards across key risk areas including, Security, Transparency, Legal & Regulation, and Market Quality. This edition also features key contributions from VASPnet, with its best-in-class regulatory and license data - covering 77 regulatory jurisdictions - bolstering our oversight on Exchange regulatory practices and licenses.

Coinbase and OKX led their respective centralised exchange categories (spot and derivatives) in this edition of the Benchmark. While there is a slight decrease in overall scores across centralised exchanges, a significant number (17 for spot and 10 for derivatives) are still classified as ‘top-tier’. Decentralised exchanges, though showing promise, have a smaller pool of ‘top-tier’ players, with Uniswap being the standout performer. The stricter assessment criteria implemented this time around suggests a maturing and evolving cryptocurrency exchange ecosystem, placing a higher bar on exchange quality.

Centralised Exchanges - Key Findings

Coinbase maintains top ranking
17 Spot Exchanges reach Top-Tier status, with 4 achieving AA Grade
Off-Exchange Settlement solutions are on the rise, shifting counterparty risk away from exchanges
10 Derivatives Exchanges reach Top-Tier status

Decentralised Exchanges - Key Findings

Decentralised exchanges receive updated scores and rankings.
Solana DEXs Surges in User Activity.
dYdX leads derivatives exchange rankings.
Security Concerns Remain Prevalent.
Governance participation is declining.