Poloniex Exchange: The Pure Crypto-to-Crypto Platform

Poloniex is a cryptocurrency exchange platform based in Wilmington, Delaware, USA offering a wide variety of digital assets and was founded in January 2014 by Tristan D'Agosta.

The basic view of the site

Poloniex exchange now has almost 100 tokens listed and its daily volume of trading is more than $150m. It is the world's largest Ethereum exchange by average volume in 2017, and also was ranked the 14th largest crypto exchange, according to CoinMarketCap.com.

There are currently no country restrictions for Poloniex. 50 million users from all over the world visit the exchange, most of them from the US – 25%, followed by Russia, the UK, Brazil, and Vietnam.

Account & Funding

In order to access and use Poloniex services, users must create an account and agree to provide accurate, current and complete information, maintain the security and confidentiality of user login credentials, take responsibility for all activities that occur under the account, and accept all risks of unauthorized access.

Poloniex highly recommends that users enable “two-factor authentication” or “2FA” to enhance account security and keep accounts protected from hackers.

Poloniex does not allow users to exchange tokens for money and allows crypto-to-crypto only. Fiat currencies such as USD or EUR are also not accepted.

In order to fund an account and begin trading, one will need to first procure tokens.

To deposit coins:

The account balance gets updated once the deposit is complete.

Trading

Poloniex is a pure crypto-to-crypto platform: fiat currency is not used on the platform, although the company explores the option for fiat connectivity across major world currencies. At the moment, payments can be done only using the cryptocurrencies listed by Poloniex. It supports over 70 popular digital assets, among the highest number in the industry.

The platform provides advanced charts and data analysis tools to the customers. It offers three types of facilities: exchange, margin trading, and lending.

Poloniex gives the opportunity to move the value of one cryptocurrency to another. You can also leverage the cryptocurrencies you own on the exchange and sell to earn trading profits on price movements. Besides, you can lend your funds to other users for an agreed interest rate and time period. On the other hand, you can borrow funds from other users.

Fees on Poloniex

Poloniex employs a volume-tiered, maker-taker fee schedule for all trades. There are no fees for deposits. For withdrawals, there is a transaction fee required by each network.

The maker-taker model encourages market liquidity by rewarding the makers of that liquidity with a fee discount. It also results in a tighter market spread due to the increased incentive for makers to outbid each other. The higher fee that the taker pays is usually offset by the better prices this tighter spread provides.

Every 24 hours, Poloniex calculates the last 30 days of trading volume in USD on the user’s account (spot and margin combine) and dynamically adjusts the fees according to the following schedule:

The Hack: Rebuilding reputation

In March 2014, the site of Poloniex was hacked and 12% of Bitcoins held on the exchange were stolen. The company took full responsibility for this minor hitch in their rise to stardom by paying back all their customers that were affected by the hack. The stolen funds were restored partly from their own pocket and partly by raising fees.

Since the 2014 hack, the broker has been slowly rebuilding its reputation on the security front. On the face of it, Poloniex has sound security protocols.

The company uses centralized exchange audits and there is no third party outsourcing when it comes to private keys for wallets: Poloniex controls all the keys itself.

Another safety feature that is built into the exchange is the “air-gapped” cold storage feature. Poloniex encourages members to store as much of their deposits as possible here.

“To protect your money, we keep most deposits in air-gapped cold storage. Online, we have only what’s needed for active trading. We also monitor activity 24/7 to block any suspicious activity,” the company notes.

There is also 2-factor authentication plus as with many e-wallets, crypto wallets, and crypto exchanges, the security systems have browser recognition in place.

There is, however, a high custodial risk with Poloniex simply because they use a centralized platform. With this style of system, you should always make sure that if you are not using funds for lending, trading or exchange, then you should have those funds stored in a wallet.

Joining the Cycle Team

Circle Internet Financial Ltd., a closely held mobile-payments firm backed by Goldman Sachs Group Inc., has announced that it has purchased Poloniex cryptocurrencyexchange. Rumors of the acquisition, circulating for a long time, were confirmed by both parties.

“We are excited to announce that Poloniex will be joining the Circle team and building on our foundations to further scale our platform, grow our global reach, and accelerate the token ecosystem in the months and years ahead.

In working closely with the Circle team to formalize our union, we have found a shared vision for a future in which decentralized cryptocurrency protocols create a far more open, inclusive, and evenly distributed global economy. With Circle's depth of experience, we could not imagine a better strategic partner to help us scale Poloniex beyond this phase of initial growth,” the Poloniex team noted in a press release.

Poloniex is already available in more than 100 countries, and Circle plans to scale it even further, Circle co-founders Sean Neville and Jeremy Allaire said in a blog. Circle plans to increase its token listings, and explore the fiat connectivity to the dollar, euro, and pound that Circle already offers through its mobile app, they said.