A Platform-Centric View of the Kraken Exchange
The application of new algorithms, big data, and cloud computing is changing the nature of work and economy structure. However, the exact nature of changes will be determined by business, cultural, political, and social choices made. These socioeconomic and sociotechnical conditions have laid the groundwork for the emergence of digital platforms, also known as a platform economy. A platform is a shared set of systems, technologies, or tools that serve as the foundation of innovation development; the technology architecture and rules allow regulated interactions or technologies of different parties with the market (Gawer & Cusumano, 2014). From a cryptocurrency perspective, Kraken is great exchange platform. Cryptocurrency exchange platforms, like Kraken, work similarly to traditional stock brokerage platforms. The founder of Kraken, Jesse Powell, recognized the importance of Bitcoin from the onset and believes the exchange is the most critical aspect of the cryptocurrency ecosystem. Kraken strives to provide institutions and investors the means to invest in the space quickly and securely. The Kraken platform provides investors access to digital currency markets like how E-Trade platform provides investors access to traditional financial markets. Kraken serves as a platform for innovation and a platform for multi-sided marketplace underpinned by focal value proposition for investors and institutions. As a platform, Kraken serves developers, leveraged crypto, active traders, etc. with cross-sided network effects (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.; “Gawer and Cusumano — 2014 — Industry Platforms and Ecosystem Innovation Platf.pdf,” n.d.).
As a venue for innovation, Kraken provides a shared set of resources that serve as the foundation for the innovation of complementary products and services for its third-party users. As the platform owner, Kraken has built and maintains the platform architecture and application programming interface (API). Platforms, such as Kraken, offers services to external entities through its published APIs. APIs serve as the interface that allows two unrelated systems to interact with each other. The API specification describes how each system must interact with the API itself (such as the language that must be used, the syntax of the messages that are passed back and forth, how quickly messages can be sent, etc.). Specifically, for cryptocurrency trading, the Kraken API enables users to interact with the exchange programmatically (via software instead of human interface), allowing users to obtain real time market data, make trades, and manage accounts. Kraken has published its REST API for spot exchanges; Kraken’s REST API is organized into publicly accessible endpoints (market data, exchange status, etc.), and private authenticated endpoints (trading, funding, user data) which requires requests to be electronically signed. Kraken has made available its WebSocket’s API and Kraken Futures API. The API allows its users to innovate new product and service offerings for potential customers. The Kraken API allows third party services, such as trading bots, mobile apps, and portfolio management services, to integrate with Kraken accounts so users can view balances, retrieve trading history, place orders, cancel orders, etc.,. (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.).
As a venue for multi-sided markets, Kraken provides a set of technology architectures and rules that allow for regulated participatory transactions, for both institutions and investors. Kraken serves as a creditable platform within the cryptocurrency market with a long track record. Founded in 2011, Kraken is one of the most established cryptocurrency exchange platforms within the cryptocurrency marketplace; initially, Kraken targeted European investors then later begun offering services to clients in Canada and the United States. Kraken is a feature rich platform which also allows its investors to access leveraged crypto products. For example, Kraken provides margin accounts with up to 5x (1:5) leverage within spot trading markets. This means that a $100 stake on Ethereum may be amplified to $500. Investors who understand future markets and desire to access derivatives, the exchange platform can be leveraged 50x (1:50). Conversely, a $100 stake into an open position of $5000. Leveraged accounts are extremely risky pursuits for novice investors (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.; “Gawer and Cusumano — 2014 — Industry Platforms and Ecosystem Innovation Platf.pdf,” n.d.).
For investors who avoid leveraged cryptocurrency products, Kraken is also a viable platform to actively trade digital currencies. From an asset diversity perspective, Kraken supports more than 185+ digital currencies. Investors can get started with an investment of $10 or more. Investors will pay commissions of 0.26% per slide when buying and selling crypto on the Kraken exchange platform. Kraken is based on the maker/taker model which reduces commission rates as trading volume increases. Aside from being a preferred exchange for bitcoin liquidity, Kraken is consistently among the top exchanges by volume for all the assets it lists. With thousands of global clients buying and selling cryptocurrency each day, its highly likely that investors and institutions will get the better price for whichever token being considered to trade (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.; Gawer & Cusumano, 2014).
Kraken is also popular platform from an educational and market intelligence standpoint; the Kraken exchange platforms seeks to assist its investors in beating the market (focal value proposition). Whether an advanced trader or a crypto-beginner, Kraken gives investors the power to chart their own financial course. Kraken has an ever-growing number of cryptocurrency pairs for its investors to invest in and cadre of tools and features for investors to leverage as they strive to grow their portfolios (value proposition for investor side). Conversely, Krakens also strives to be a premier cryptocurrency investing solution for institutions of all sizes from over-the-counter (OTC) trading to personalized white-glove account management (value proposition for institutional side). Kraken strives to offer competitive pricing and exceptional liquidity for markets while supporting the attainment of investment goals confidently and quickly. From a multi-sided marketplace platform perspective, Kraken has articulated a focal value proposition and multi-sided value propositions which helps guides the value creation among network participants and partners. As one can see, Kraken has designed and implemented several useful tools for its users to transact and create value (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.; Gawer & Cusumano, 2014).
Kraken remains a closed platform that exhibits positive cross-sided network effects. Kraken also exhibits bi-directional cross-side network effects between institutions and investors for cryptocurrency assets; the closed platform helps the platform to remain secure while offering a consistent user experience for both institutions and investors. In addition, network effects are present between developers and end-users of the Kraken platform, not solely limited to institutions and investors alone. The Kraken exchange platform is a tremendous resource with has low homing costs; this feature allows ecosystem members to better manage their dependency-based risks on the Kraken platform.
As one can see, Kraken serves as a platform for innovation and a platform for multi-sided marketplace underpinned by focal value proposition for investors and institutions. As a platform, Kraken serves developers, leveraged crypto, active traders, etc. with cross-sided network effects. Kraken is well served by the platform attributes discussed previously; Kraken will continue to innovate to remain a disruptive force within the cryptocurrency space with the highly anticipated release of the NFT marketplace. For example, the NFT marketplace will allow Kraken users to collect NFT across multiple blockchains, enjoy zero gas fees for trades, protect NFTs with industry-leading security, reward NTF creators with their cut from each resale, and track NFT rarity scores (“Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken,” n.d.; Gawer & Cusumano, 2014).
Bitcoin & Cryptocurrency Exchange | Bitcoin Trading Platform | Kraken. n.d. . https://www.kraken.com/en-us, September 19, 2022.
Gawer, A., & Cusumano, M. A. 2014. Industry Platforms and Ecosystem Innovation: Platforms and Innovation. Journal of Product Innovation Management, 31(3): 417–433.
Gawer and Cusumano — 2014 — Industry Platforms and Ecosystem Innovation Platf.pdf. n.d. .
