Long gone are the days when local or regional crypto exchanges and other platforms enjoyed a lack of competition. These were the days when growth was entirely based, or mostly, on the revenue generated from trading volumes. In those days, having a first-mover advantage and a good user experience was all you needed to ride the crypto trading wave. Some platforms profited immensely, others plenty.
But with mass adoption came mass competition, and as more and more crypto aficionados poured into the space, more market players wanted to benefit from it. Well-oiled trading platforms became white-label commodities that anyone could own. And with many new launching almost daily, loyal customers began their path down the offers’ stream of joining new exchanges or wallets. Platform technology became irrelevant and customer loyalty a priority.
This priority opened a new set of questions on how to lock in customers and prevent churn. The findings have shifted strategies and resources, with the more innovative market players putting greater emphasis on building product ecosystems that bring greater value to the end users. One key product in these extra offerings has been earning accounts. Found in the most prominent trading platforms and some cryptocurrency wallets, earn accounts let users earn up to 15% interest from loaning their digital assets. This new service has had a tremendous impact in preventing churn and making the platform more attractive for new customers. But wait! What’s an interest-earning crypto account?
“the premise of an interest-earning crypto account is the same as a regular saving account. You deposit your Bitcoin or altcoin and earn compound interest on your assets.”Yahoo Finance
As proprietary platform technology one day stopped being a source of competitive advantage, the same is happening with the technology to provide earn accounts. What only the prominent market players could afford to develop is now available for all platforms that want to integrate it. Tesseract’s Earn API is a solution designed explicitly for platforms. It is a white-label solution that enables exchanges and wallets to start offering interest, Defi, and staking accounts to their end users. The API solution has been planned for seamless integration and a problem-free experience. The earn product is feature-rich and designed for advanced customization so our partners can tailor it as much as they would like to fit their audiences and differentiate themselves from the competition.
“We searched for a solution that would keep us competitive in the future and after evaluating most in the market, Tesseract’s Earn API came out as the most advanced and customisable product available.”Tesseract Earn API Partner
Like in every true partnership, Tesseract goes the extra mile supporting partners. That said, the main areas of support are legal compliance, tech integration, and GTM guidelines and assets. Another great benefit of partnering with Tesseract, if not the most important, is that the company is regulated and licensed by Finland’s Financial Supervisory Authority (FIN-FSA). This characteristic is essential for partners when evaluating risk. It slashes concerns about legal compliance and reduces the time needed to integrate and launch the service.
So now that we have gone through some historical facts, market insights, and the benefits of an API-based solution like Tesseract’s, let’s first name each benefit before explaining each of them. These six benefits are:
Now let’s talk about each of these.
Having more services to offer makes you more attractive, and that, in return, prevents churn. A product where end users have the opportunity to store their crypto in your platform to make a return not only prevents the customer from never returning but locks the customer up to your ecosystem.
Without any other products to offer than trading, you will be in a constant price battle, having to squeeze your margins more and more. How long can you keep on doing that? Having an ecosystem of products will help you attract new customers looking for more to do with their cryptos. Earn accounts, in particular, are excellent for exchanges and wallets because they complement an end user’s trading activity and encourage them to bring their cryptos along.
If you are more attractive to new customers, you have to give less away to bring them along. Sure, you still need to promote your products, but you will have more cards to play and promote your services than if all you had was the price. Furthermore, notice that the platform will recover the customer acquisition cost as soon as the user opens their first earn account. The opportunity is yours to make the most of it, and if you play it well, earn accounts will not only help you decrease customer acquisition costs but bring them down to 0. That is a significant source of competitive advantage.
If you do not have to put time and resources into developing the technology, you have the opportunity to be more focused on growing the platform in users and activity. From a strategy perspective, you have a greater chance to compete if you can dedicate your full attention to the platform’s primary activity. There’s no point in reinventing the wheel if the current one works well and you can buy it off-the-shelf.
Isn’t this a business maximum? If a platform’s revenue stream is only based on trading, it is exposed in two ways, and both are equally dangerous. The first is related to the competition and how it can massively lose users with the entry of new players – and that is happening every week. The second is the effect of a bear market, where trading volumes go minimal, and so does the platform’s revenue generation. Both can significantly impact that offering anything that helps decrease this risk is a significant investment.
Earn accounts are in their early days, and there are still so many possibilities and features to make them better, more attractive, and more lucrative. But staying ahead of the game requires investment, expertise, and constant innovation, none cheap. Offering a basic Earn account will soon not cut it enough with your end users, who will be tempted to churn to another platform offering more advanced Earn products and functionalities. In this context, partnering with a white-label supplier like Tesseract makes more sense than ever. You will be offering a top-notch product under your brand that can easily compete with the earn accounts provided by the most potent exchanges and wallets available today.
To recap, this article has introduced you to some historical insights on the adoption of cryptocurrencies, the growth of exchanges, wallets, and other platforms, and the challenges they face today. We have then explained what a crypto earn account is and the strategic characteristics of these products within crypto service portfolios. We have then named and explained six valuable benefits of offering earn API accounts on your platform. If you do not have earned accounts by now, keep in mind that at the moment, they are a great source of competitive advantage and that the earlier you integrate, the sooner you will start enjoying all these benefits.
Are you interested to know about our partners’ experience with Tesseract’s Earn API? Read it yourself in this article.
Do you have some questions that require an expert? Please leave your email or write us at firstname.lastname@example.org and our Earn API team will be happy to solve all your questions or doubts. No strings attached.
Co-written by Fito Benítez, Alex Lindhölm, Henri Nieminen, and Ville Salomäki.
March 18th, 2022 @ Helsinki, Finland