How long will it take for Binance to earn $4 billion?

How long will it take for Binance to earn 4 billion? After some calculation, 4 billion is roughly the revenue of Binance in one year in a bear market.

Coinbase ’s Q3 financial report provides a good reference sample:

The transaction revenue in Q3 was $288.6 million, and the market share was approximately 5%-7%.

Binance's market share in "spot" is about 7-10 times that of Coinbase, so Binance's revenue in "spot" each quarter may be 2.0-2.88 billion.

But Coinbase's "efficiency" in making money is significantly higher than Binance: CB was able to earn 3.8 billion spread in Q3 (288.6 million in revenue, 76 billion in trading volume). On Binance, the taker/maker ratio of the most ordinary users is 0.1%. For institutional users, Binance can only provide 1bp of maker rebate and 2.4bp of taker at most. So Binance can earn a spread of -1bp+10bp=9bp at most (that is, institutions provide makers and retail investors act as takers. Another situation where institutions act as takers and retail investors act as makers is ridiculous and almost non-existent). Therefore, it can be deduced that Coinbase's efficiency in making money is guaranteed to be 4 times that of Binance. In summary, Binance may earn 500-770 million in spot trading every quarter. If you include the rebate, then Binance may earn about 500 million every quarter.

Taking the contract market into account, the transaction volume of the contract market in Q3 reached the industry's "freezing point": a total of 6.1 trillion, and Binance's market share was about 50%, about 3.1 trillion.

Although the contract market is large in volume, it is not very profitable. For example, on Binance, the most common user's fee rate is 1.8bp for maker and 4.5bp for taker, while the maker fee rate of the best market maker is 0.5bp, so the maximum Spread that Binance can earn is 4bp.

Based on a 4bp spread, Binance can earn about 1.2 billion in Q3, but this number needs to be discounted, for example, rebates need to be taken into account, and the transaction situation needs to be considered (how can it earn 4bp on every transaction?). If we roughly discount it by 50% (after all, the rebates are quite a lot), then Binance can earn 600 million in Q3.

Binance makes about 1.1 billion every quarter from spot and futures. The 4 billion fine is very similar to Binance's annual revenue in the "bear market" (leaving aside businesses such as staking and mining pools). In this case, it seems that the DOJ's calculation is "quite reasonable."

BTW, if it is a bull market, the exchange's business volume and profits often increase more than tenfold.