Crypto Super Brands Are Closer Than You Think
In the rapidly evolving crypto space, crypto platforms and blockchain networks are on the path to becoming the next generation of super brands. According to Hendrik Ghys, co-founder and CEO of Thalex, there’s nothing inherently preventing crypto platforms from achieving super brand status. In fact, many exchanges and crypto platforms are already positioned to leverage key elements of customer loyalty and demand-based competitive advantages that are common among traditional super brands.
The Foundation of Super Brands
The idea of a super brand isn’t just about awareness—it’s about customer captivity, which comes from creating lasting habits, high switching costs, and low search costs. Bruce Greenwald’s book Competition Demystified highlights these tenets as the core principles for building a strong, lasting brand. Many of the top crypto exchanges already fit this model. They have the infrastructure to create captive customer bases and can significantly influence market trends.
Starting Points: Crypto’s Unique Characteristics
Unlike traditional finance, which has localized and hierarchical structures, crypto exchanges were built to be borderless, welcoming users from all over the world. There’s no equivalent to the New York Stock Exchange or London Stock Exchange in crypto. The early days of crypto were marked by fast-paced innovation, where users switched platforms frequently to follow new listings and trading features. As crypto platforms matured, they started to focus on building habits—first through margin trading, and later by introducing perpetual contracts and stablecoin settlement.
With these innovations, exchanges began to build customer loyalty, and regulatory changes, such as KYC and AML protocols, raised the switching costs, making it harder for customers to easily leave one exchange for another. This regulatory shift further concentrated market dominance among a few major platforms.
The Exchange Paradox: Growth vs Innovation
Despite the advantages of large-scale operations, the exchange paradox emerges: Once exchanges reach a certain level of growth, scaling innovation becomes more difficult. As organizations grow, they often lose their entrepreneurial spirit, becoming targets for regulators. This presents an opportunity for smaller, nimbler exchanges to outperform the giants by introducing new, more user-friendly products or better customer experiences.
For example, Deribit capitalized on BitMEX’s struggles with frequent system outages by offering more stable options markets, thus capturing a significant portion of market share. Once a smaller platform identifies ways to break the cycle of habit, switching costs, and search costs, it can grow exponentially. However, once they reach the top, they face the same paradox, and the cycle starts anew.
How to Become a Super Brand
To break the cycle and solidify themselves as super brands, exchanges must create network effects that tie together habit, switching costs, and search costs. The key to staying at the top is to remain innovative, maintain an entrepreneurial mindset, and be proactive about regulatory challenges. It’s crucial to avoid the “too big to fail” attitude that often leads to complacency.
For crypto exchanges to evolve into super brands, they must continuously engage users, innovate, and create experiences that make it difficult for users to leave. Building trust and maintaining habit are essential in retaining customers and scaling up.
In the fast-moving crypto industry, no brand is invincible, but the exchanges that can harness these principles of customer loyalty and innovation are poised to succeed as super brands of the future.
Hendrik Ghys has extensive experience in both traditional finance and crypto, including his instrumental role in the acquisition of Bitstamp, which provides him with a unique perspective on the challenges and opportunities for crypto platforms aiming for super brand status.
