How safe is Poloniex’s cryptocurrency exchange platform? Are the owners known & active in the crypto community? During this Poloniex review you will learn how this once insignificant substitute exchange gained user-trust, innovative functionality, and subsequently swallowed its competitors’ market share. From full customer refunds after a minor security breach, to a successful infrastructure redesign, and a bit a sheer luck, it’s no secret that Poloniex’s history is a pretty interesting read. Poloniex is a crypto-to-crypto global exchange operating in the US. It registered with the Financial Crimes Enforcement Network (FinCEN) as a money service business (MSB) on August 29, 2016. However, it has been operational since January 2014.
While the bureau lists the location of exchange’s offices in Wilmington, Delaware, research shows the address belongs to an agent. Little information is available online—including on the company’s website—about ownership. On LinkedIn and company profiling website Owler, someone named Tristan D’Agosta identifies himself as the founder and CEO of Poloniex. According to information he shares on these pages, D’Agosta is a music composer and a former freelance writer with a Bachelor of Arts in music from Rutgers University.
One of the biggest pluses of the Poloniex exchange is the wide range of coins it offers. At time of writing, Poloniex supports the following coins and also supports BTC pairing, USD pairing, ETH pairing, Monero pairing, and USDT pairing. Poloniex is favoured by many serious crypto traders and it’s easy to see why.
List of coins offered:
- XRP (Ripple)
- Kyber Network
- Bitcoin Cash
- Basic Attention Token
- Bitcoin SV
- Loom Network
- Ethereum Classic
- LBRY Credits
- Steem Dollars
- Pascal Coin
Advantages of Poloniex
- Go-to place for serious crypto traders seeking new & trendy coins for speculation
- Provides extremely detailed charts, as well as efficient data-analysis tools
- Most trading interface code is executed client-side & therefore open source for enthusiasts to examine
- Offers a high-volume margin trading & lending service for major crypto assets, on top of an exchange platform
- Its services are accessible from anywhere in the world
- Supports over 120 digital assets, among the highest number in the industry
- Charges low crypto deposit and withdrawal fees compared to other exchanges
- Fully refunded affected users after a minor security breach
- Community representatives are active answering questions and hearing feedback on social media
Disadvantages of Poloniex
- Some unconfirmed reports of users not being able to withdraw funds from Poloniex
- Private key management is centralised, exposing funds to custodial risks
- The inability to deposit fiat currency excludes all users wanting to use Poloniex to “on-ramp” into crypto
- The customer support ticketing system is poor and sometimes non-existent
- The identities of managers and investors are unknown
- No known physical offices. Perhaps a security precaution – but still a big negative for trust.
- Increasingly requiring users to create accounts and verify their identity for high-volume activity
- Trollbox open chat system recently deactivated. Though this has helped reduce price manipulation through the spreading of misleading information
Security at Poloniex
As with all centralised exchange audits, I would like to remind readers of this Poloniex review that the exchange controls all private keys to the wallets holding your cryptocurrencies. The exchange assures users that it stores much of their deposits in offline “air-gapped” cold storage. It offers 2-factor authentication for account holders, as well as browser recognition tools.
While Poloniex’s promises of security may be based on sound capacity, users must trust that the measures in place are tight enough and that individuals in charge of funds are honest.
In 2014, the exchange suffered a minor security breach where 12% of all customer bitcoin deposits were stolen. In an unprecedented move (at the time), a statement was issued assuring users that all funds would be reimbursed. Poloniex carried through on its promise to reimburse its affected users several months later.
As the Bitcoin project itself has shown, lack of information about a founder is not always a sign of bad intent. However, as a precaution, it is advisable to keep on the exchange only as much value as you need to lend, trade or exchange at any given time, especially considering Poloniex is a centralised platform with a high custodial risk.
As with all centralised exchanges, you should always send whatever funds you don’t immediately need on the platform to a wallet you control.
Since Poloniex accepts only crypto deposits and withdrawals, it is one of the cheapest exchanges to use. This is due to the fact that the exchange doesn’t support “traditional” deposit methods (via fiat currency), which are more costly than cryptocurrencies – due to extra regulatory requirements, KYC vetting and interbank fees.
Both the person putting up an offer to buy or sell (the maker) and the person picking and accepting an offer (the taker) pay transaction fees. Generally, a maker pays fewer fees in a transaction than a taker. Maker fees range from 0% to 0.15%, while those for the taker range between 0.05% and 0.25%. In both cases, the higher the amount involved in a trade, the lower the fees paid.
Maker and taker fees apply to both the exchange and the trading platform. Lending fees are set by those putting up their funds for borrowing. Since the market is competitive, the lower the interest a lender charges, the more successful they are at having traders taking their offers.
Nevertheless, average loan offers on the platform charge at least 0.2%. From the lender’s earnings, Poloniex will take 15%.
The Poloniex interface works nicely, except when the site is under strain from DDOS or legitimate peak trading times. “Un-cached” users are greeted by a standard Cloudflare “checking your browser” page. Such pages are widespread among crypto sites and are used to filter=-out botnet and malicious traffic.
In 2015 the whole interface was very successfully redesigned. There are many positive Poloniex reviews mentioning how nicely the website presentation has come along since 2014.
This is its current interface setup:
The overall user experience is close to that of Bittrex or Kraken – though slightly more intuitive then the latter. You could even compare Poloniex to Shapeshift, except you’ll need to sign up to Poloniex while Shapeshift allows guests to trade without registration.
Choosing a pairing, however, is not as straightforward as Shapeshift. You may have to work to find the page from which to choose your pairing.
A common complaint from users is that it takes a long time for deposits to reflect in the user account. Users have also reported a few cases of coins sent but never showing up in the receiving account.
Further, many users accuse the exchange’s customer support of poor and slow response to complaints. Some have reported that tickets sometimes take months to resolve.
Signing up for an account on Poloniex is easier than on most other major digital asset exchanges. While it observes some level of Know Your Customer requirements, the process is less stringent partly due to the fact that the exchange accepts only crypto deposits.
Users are only allowed one account, and registering more than one could result in suspension or expulsion from the platform. Each account, however, offers exchange, trading and lending services. You automatically have access to all three services when you sign up for any of them.
The exchange service facilitates the movement of value from one crypto to another. On the other hand, the margin trading service enables you to leverage your cryptos and earn gains from price changes.
If you are risk averse but still want to make a profit on the platform, you can put up your cryptocurrencies for others to borrow and trade with. In exchange, you will receive a guaranteed interest rate.
When you engage in margin trading, you essentially have access to the three sections available on Poloniex. You access exchange, a margin trading and a lending/borrowing section. You can borrow funds from the lending section to invest through the margin trading section.
In the event you want to move your value to another type of crypto, you will need to use the classic exchange section. It is also through the exchange section that you make deposits.
When compared to trading platforms such as Coinbase Pro (formely GDAX), or Bitstamp/Kraken, I feel that Poloniex is the easiest to start using. Once your signup is complete (this takes less than five minutes) you are ready to deposit and start trading. The most differentiating feature from the rest of the trading platforms, however, is the fact that Poloniex offers more risk-averse crypto holders the option of lending out their coins.
In addition to the three sections separated according to function, Poloniex also offers three levels of account verification. You get the first level of verification by providing an email address, your name and country of residence at the signup stage. The level one verification allows you a daily minimum deposit and withdrawal of $2,000 worth of cryptos. You can exchange, trade and lend with this level of verification, with the only limitation being how much you can deposit and withdraw daily.
If you need to have your daily limits increased, then you will have to apply for level-two verification. You will do this by providing a physical address, postal address, phone number, date of birth and passport ID. Along with the application, Poloniex requires you to upload an ID photo and a passport photo. With approval, your daily limit for deposits and withdrawal grows to $25,000 worth of cryptos.
You can get an even higher level account with a limit that exceeds $25,000. You apply for this level by reaching out to support. The deposit and withdrawal limits Poloniex offers are a bit higher than you will get from accounts on Coinbase, Kraken and Bitstamp.
To summarise, Poloniex is a decent, time-tested exchange which boasts cheap fees and a comprehensive trading console, though one that may be a tad intimidating for new users. Unfortunately, accounts cannot be funded using fiat currencies so BTC or any of the many coins offered on the exchange must be purchased elsewhere and then deposited into your Poloniex account. Overall, Poloniex seems like a solid exchange that’s secure and reliable.