Altcoin exchanges have been a hot topic recently. Top exchanges earned tens or even hundreds of millions of dollars in 2017, despite users of virtually all exchanges running into frequent and significant problems. Such a huge market, combined with the lackluster nature of top providers, creates a prime opportunity for new exchanges to enter the market and potentially grow on the scale of magnitudes.
For individuals looking for a slice of the pie, KuCoin Shares (KCS) provides an interesting opportunity. KCS is the fuel behind the KuCoin exchange, a new and quickly growing altcoin exchange striving to rival major players such as Binance. The Hong Kong-based exchange officially launched on September 15 and has already grown to be the 17th most active cryptocurrency exchange by volume, recording over US$150 million in transactions in the past 24 hours alone.
KuCoin Shares were initially distributed through a private sale and an ICO as a means of funding the development and growth of the exchange. Like Binance’s token (BNB), KCS can be used to pay trading fees, and doing so rewards users with a significant discount. Unlike Binance Coin, however, KuCoin provides immense value to its KuCoin Shares by sharing 50% of all trading fees with all KCS holders.
KCS is subject to daily dividends, with half of the fees being split among all circulating KCS, which will never exceed 100 million KCS (91 million are currently in circulation). As KuCoin charges fees in the currency being traded, KCS holders will passively accumulate a stack of all coins being traded. Such a portfolio could potentially pay off massively if KuCoin were to achieve a status similar to that of Binance, as the latter’s coins have recently outperformed the overall cryptocurrency market since the exchange amassed huge popularity.
KuCoin Shares is currently trading at US$8.00, with a market cap of over US$727 million – currently the 40th largest listed on CoinMarketCap. At current volume and share prices, each KCS yields an estimated daily return of .02%, which works out to under 8% yearly. While this is not a huge amount, if the exchange were to grow to the size of Binance, that number would be closer to 100% yearly. Of course, this does not account for the inevitable price appreciation of the KCS token itself. Additionally, if exchange volumes as a whole grow at even a fraction of the rate they did in 2017, it is likely that the daily rate of return will naturally appreciate over time.
Another great feature of KCS is its buyback and burn program. Every quarter, KuCoin will use 10% of its profits to purchase and burn KuCoin Shares. This program will continue each quarter that KuCoin is profitable until 100 million of the 200 million coins in the total supply have been burned.
Skepticism
Very recently, there have been issues with the aforementioned daily dividends. Speculators suggest that actual dividends are not paying out as highly as they should be. Supporters of the exchange argue that KuCoin has been growing very rapidly, and there are naturally some growing pains. Any current issues, like ones that emerged in the past, will be addressed and corrected by the team. Another major point of skepticism concerns future dividends. While dividends will never be removed, there are many rumors suggesting that the percentage of fees shared with KCS holders will be reduced from 50% to 15% in either March or April, when the 50% rate is no longer assured.
Regardless, KuCoin as an exchange has been growing at an impressive rate. Many investors are looking to earn a share of the massive profits achieved by cryptocurrency exchanges, and the dividend system provides a huge opportunity for speculators that anticipate exchanges to grow to handle much more activity and volume than what is currently possible. Investors who are bullish on these types of coins may also be interested in COSS, a much smaller coin that also grants regular dividends tied to trading fees from its exchange, Coss.io, to holders.
