Poloniex
Poloniex Review 2023: An Expert's Comprehensive Analysis
3.5
3.5
3.75
3.25
3.5
Overview
General
Fees
Customer service
Requirements & Accessibility
Pros
Cons
Key Takeaways
Origins
Introduction
Poloniex is a well-known cryptocurrency exchange for retail investors but one that has started to struggle since with its declining market share as more than 200 new exchanges entered the market.
Regardless, the platform prides itself on its healthy selection of digital assets and a myriad of features. But what does it offer that others can’t?
Join Conscan as we take a deep dive and find out!
History
Poloniex was founded in Delaware, USA, in January 2014 – making it one of the earlier exchanges to enter the scene before the big bull runs began. The company is the brainchild of Tristan D'Agosta, who has a music industry background and previously founded the Polonius Sheet Music company in 2010.
Things didn’t start particularly well for the fledgling company, as it almost immediately suffered a high-profile hack shortly after its launch in March 2014, when it lost approximately 12% of its BTC, which was worth approximately USD 50,000 at the time.
Despite this, the exchange's management responded openly to the hack, offering full reimbursements for the stolen Bitcoins from D'Agosta's company profits. Following this rocky start, Poloniex was forced to temporarily raise its fees to recoup losses.
Things would go quiet for a while before the company made headlines again in 2016 – this time with good news, being the first exchange to list the Ethereum (ETH) cryptocurrency. Following the new addition, the exchange's trading volume increased, and it quickly became one of the most popular exchanges in terms of liquidity.
Poloniex's reputation really began to change in 2018 when social payment company Circle paid a staggering $400 million to acquire it, integrating its payment services and institutional trading with Poloniex's retail trade platform, with the aim of turning it into America’s first fully regulated cryptocurrency exchange.
In response to this acquisition, in order to become regulatory compliant, the exchange delisted nearly half of its crypto assets that could be classified as securities and instituted strict KYC (know your customer) checks. This was met with both praise from some users and lambasted for others, who preferred its range of options.
Circle's acquisition of Poloniex also created a platform for OTC cryptocurrency trading and payments for hedge funds and large banks such as JP Morgan and Goldman Sachs, (both of which own a stake in Poloniex, which given DeFi investor’s general feelings towards traditional finance isn’t the easiest pill to swallow).
Poloniex's offerings were enhanced significantly by Circle’s acquisition. Two months after being acquired by Poloniex began promoting the availability of institutional accounts, with their primary focus being to create an over-the-counter (OTC) service for institutional traders, with monthly volume exceeding $2 billion.
They also created Circle Research, which offers in-depth cryptocurrency market analysis as well as how-to tutorials to aid traders of all skill levels.
Poloniex exchange then underwent significant changes in 2019. Early in the year, the company had faced difficulties due to the uncertainty in the cryptocurrency regulatory environment in the United States. As a result, it has continued to reduce the number of coins available to US crypto investors.
Around this time Poloniex was spun off by Circle in November 2019 as a separate entity, Polo Digital Assets, Ltd., backed by an unnamed group of Asian investors that included TRON CEO Justin Sun.
The newly formed company was registered in Seychelles, a remote location known for crypto-friendly regulations. It also serves as a home for unregulated cryptocurrency exchanges such as BitMEX, Prime XBT, and, (according to reports), Binance. Circle stated that it faced "challenges as a US company growing a competitive international exchange" in a response that defended this move.
Under new leadership, the Poloniex crypto exchange changed course and abandoned forced AML/KYC checks, making it possible to trade on Poloniex without verification once more.
Furthermore, the platform added new features and revoked trading access for US customers, implying that it had abandoned the idea of becoming a fully regulated exchange.
All in all it has been a turbulent time for the exchange from its inception to now, but its purchase by Circle saved it from obscurity, and has helped keep it relevant to this day.
User Experience
Usage and Popularity
Poloniex, like most cryptocurrency exchanges, employs a proprietary web-based trading platform.
The site is well-designed, with a user-friendly trading screen. The chart includes multiple time frames and can be displayed as a candlestick chart or a line chart. The platform also includes integrated technical indicators like Bollinger Bands and Fibonacci levels that can be overlaid on the trading chart to provide a more in-depth analysis of the markets. The trading platform's interface provides a comprehensive view of all of the 200+ cryptocurrency pairs that are available for trading.
Poloniex also offers a strong selection of cryptocurrencies, with some being higher on the risk scale due to their lower market caps, but representing unique investment opportunities for astute traders.
The site also has some of the lowest fees on any exchange (outlined in greater details below). Users get full access to services on both mobile and desktop sites, including hedging and leveraged trading.
Unfortunately, US citizens and residents still can’t use this exchange, which is a big loss for the company due to the country’s keen interest in digital assets but unsurprising due to their governments notoriously complex financial laws and red tape. Still, citizens of other countries (apart from those on the FCA banned list) can freely use the site with no issues.
Poloniex also provides its users with access to a variety of forums and chat boards to help them improve their trading experience. The platform also allows users to customize their experience, providing a variety of automated programs that can be tailored to a user’s specific trading strategies. There are also numerous tutorials available, making customization easier than ever.
Advanced users can even utilize an Application Program Interact (API) to customize specific commands that help them buy and sell digital assets on the platform. The API can sell a specific cryptocurrency when it reaches a certain price automatically, making life easier for busy Poloniex users, and is a very useful feature that lots of exchanges simply don’t have, meaning it's a big plus for the exchange.
Lastly Poloniex offers Silver and Gold level accounts, as well as Market Maker user status, which are available for more experienced crypto enthusiasts and high-volume traders and institutional investors.
They provide increased daily withdrawal limits, lower trading fees, and personal account managers, and are a nice plus for those with the affordability and/or trading skills necessary.
Ease of Use and Design
Poloniex's design is also considered to be appealing. The exchange uses a simple color scheme and a modern font, which gives it a clean and professional look. Poloniex also uses a variety of visual elements to make it easy to understand the market data they present.
Here are some additional thoughts on the ease of use and design of Poloniex:
The platform also offers a variety of features that users will enjoy such as grid trading, copy trading, derivatives trading, and even an ‘earn’ section on the page where users can stake and earn rewards for doing so.
On the subject of earning rewards on the platform, aside from staking to earn, Poloniex also offers a ‘reward center’ section on the website where users can complete tasks to earn cryptocurrency rewards. These tasks include simple things like completing your KYC verification, depositing more than 10 US dollars into your account, and trying out futures trading for the first time. All great ways to encourage users into utilizing the platform to its fullest potential.
Customer Support
The customer support service at Poloniex again isn’t its strong suit.
Poloniex primarily provides customer service via email, in which users can open a customer support ticket by completing a simple contact form. The exchange also includes a help section with frequently asked questions.
However, users have reported slow response times and inadequate responses to issues. There is no phone support, but this is a pretty common omission for most exchanges for some inexplicable reason, so it's just par for the course.
Generally Poloniex, for the most part, appears to be a self-service platform where users largely manage their own accounts.
Users who don’t feel comfortable searching for answers to questions in help sections, might prefer an exchange with more customer support options.
Fees and Promotions
Fees
Poloniex fees for taker/maker trades are 0.145% / 0.155% if the user’s trading volume is less than $50,000 in a 30-day period. Fees can be reduced if they pay with Tron – if the user has a sufficient Tron balance ($49), they will be eligible for a lower fee Tier.
Poloniex's fee structure also varies depending on the user’s 30-day trade volume, whether they are selling or buying, and the verification tier. Traders will pay a minimum of 0.07% per trade if they have a verified account, depending on the cryptocurrency. Paying in TRON (TRX) gives users a 30% discount.
Trading fees for unverified accounts are also low, ranging from 0.1% to 0.2%. Although Poloniex has competitive trading fees, the fees for buying and selling cryptocurrency are somewhat higher, and are made possible through a collaboration with Simplex, a payment processor, which is known for being fairly expensive.
For crypto purchased with a Simplex bank account, the fee is 1%. Paying with a debit or a credit card bears charges from 3.5% to 5%, with a minimum of $10, whereas Poloniex charges a fee of 0.75%.
Poloniex, unlike other cryptocurrency exchange platforms such as Binance and Coinbase, does not charge deposit fees. Users can deposit as much cryptocurrency as they want without worrying about additional fees, regardless of the type or amount of cryptocurrency, which is another thumbs up for the exchange.
Comparison
Poloniex and BitMEX are both prominent entities in the crypto trading world, and they've played significant roles in shaping the industry. Both platforms offer users the opportunity to trade a variety of cryptocurrencies.
Additionally, they've both made a name for themselves by offering advanced trading features and tools aimed at more experienced traders, such as futures contracts and leverage options. The commitment to providing a secure and efficient trading environment is evident in both, with measures like two-factor authentication, cold storage, and encrypted systems being standard.
While Poloniex and BitMEX share the umbrella of crypto trading, their primary focus and offerings diverge considerably.
Poloniex began as a spot exchange and later expanded into other areas, including futures. It offers a broad spectrum of cryptocurrencies and has historically been one of the more comprehensive altcoin exchanges.
BitMEX, on the other hand, is specifically tailored for derivatives trading, especially Bitcoin. It's renowned for offering high leverage (up to 100x) on its futures contracts, making it a go-to for traders looking for leveraged Bitcoin positions.
Furthermore, while Poloniex provides a more traditional exchange interface catering to various types of traders, BitMEX's interface and tools are primarily tailored towards those with a deeper understanding of the market and derivatives trading.
Safety Essentials
Security
Poloniex has consistently invested a significant amount of money, manpower, and time in improving platform security in order to maximize users' data privacy and financial security.
Furthermore, Poloniex employs a number of security measures, such as an Anti Money Laundering (AML) system, which includes comprehensive mechanisms and procedures, strict risk control systems, and effective emergency response plans.
It also has an extremely effective internal risk control process: When another exchange reports an inflow of illegal assets to Poloniex, the security department will first verify the contacting person's identity before requesting additional information about the transaction. Following the completion of verifications, related transactions will be blocked, and the case will be forwarded to the compliance department for further investigation. If the funds are proven to be stolen, Poloniex will initiate the return process.
Poloniex has formed partnerships with relevant institutions in order to reduce crime, return stolen funds, and protect others in the industry. Poloniex's security mechanism, risk control strategy and process, and technical performance are said to be more advanced and reliable than those of most exchange platforms.
Whilst the above is certainly impressive, it is impossible to fully assess Poloniex's security without joining the site as a user, because the exchange isn't completely transparent about all the safeguards it provides.
Its website lacks a dedicated security page, and it does not specify how much cryptocurrency it keeps in cold storage or whether it has any type of insurance. All it provides is an FAQ section that highlights the importance of two factor authentication and freezing an account if suspicious behavior is suspected.
It also currently has no Proof of Reserves and no announcements as to when one is due.
Frankly this by the exchange given how collapses of companies like LUNA and FTX have highlighted the need for more transparency with what exchanges do with user funds.
Controversy
When it comes to DeFi and cryptocurrency, scandal and controversy is always an unfortunate part of the conversation, and in this respect, Poloniex sadly doesn’t come up smelling of roses.
Quite simply the company doesn't have the best track record with scandal, and its ties to TRON's controversial founder, Justin Sun, are a red flag for many. Poloniex has had numerous problems over the years. Below is a rundown of the most notable:
As mentioned, in March 2014, hackers stole 97 BTC from Poloniex, accounting for 12.3% of the exchange's supply. To raise funds, it temporarily reduced customer balances by 12.3% and increased trade fees. Customers were fully repaid by July of that year.
In December 2019, a list of alleged Poloniex account emails and passwords was posted on Twitter. Only 5.5% of the emails on the list, according to a Poloniex representative, were associated with accounts. These users had to reset their passwords.
There's also the TRON connection. Justin Sun, the founder of TRON, is one of the investors in the group that purchased Poloniex. According to a 2022 report, Sun has significant control over Poloniex and once instructed employees to fake the KYC (know your customer) identity verification process to increase user adoption, which if true is extremely shady behavior.
Furthermore, according to the same report, Sun directed Poloniex engineers to search for Bitcoin that customers had mistakenly deposited into the wrong type of crypto wallet over the years. 230 BTC were transferred from the old crypto wallets to the Poloniex communal wallet. It is unknown what happened to the money after this action was performed, leading to further suspicion being cast on the exchange.
In 2020, the platform was responsible for $4 million of the EXMO hack being withdrawn through the site itself. Whilst the site itself wasn’t hacked in this instance, it did draw into question the lack of attention the company gave to what users were doing on the platform and drew large amounts of criticism.
Poloniex has also been in trouble with US securities regulators. In August 2021, the SEC charged Poloniex with operating an unregistered digital asset exchange, and Poloniex paid more than $10 million to settle with the SEC. While Poloniex's issues may have been resolved, this is yet another red flag.
All in all, there has been a lot of shade thrown at the exchange and it's easy to see why. Whilst some of it can be considered speculative with no actual proof, it certainly doesn’t paint the site in a great light. Still, the exchange seems determined to keep its head down and focus on providing a good service to its customers, while avoiding the controversies of the past.
Proof of Reserves
There are a few reasons why it is important for cryptocurrency exchanges to publish PoRs.
First, PoRs can help to build trust between exchanges and their customers. By publishing a PoR, an exchange can demonstrate that it is solvent and that it has enough assets in reserve to meet its customer liabilities.
Poloniex does not currently publicly publish a proof of reserves (PoR). This means that it is not possible to independently verify that Poloniex has enough assets in reserve to cover its customer liabilities.
However, Poloniex has stated that it is committed to transparency and accountability. The exchange has also said that it is working on a PoR solution and that it plans to publish a PoR in the future.
Conclusion
Poloniex exchange platform has had a turbulent few years, but it appears that the exchange is now ready to stabilize and reclaim its user base.
The trading platform has some of the lowest cryptocurrency trading fees on the market, as well as margin trading and margin borrowing, a decentralized exchange, and an IEO launchpad. Even though its customer service isn't the best, it allows users to trade without having to go through forced KYC procedures, which is a rare positive in today's crypto industry.
However, Poloniex is still unregulated and has certainly suffered its fair share of controversies over the years, so we recommend exercise genuine caution here and avoid leaving significant amounts of crypto assets on the exchange for extended periods of time.
In addition, there are simply platforms which do the same things with less issues and more transparency, so that is something else well worth thinking about before using the platform.