Well known as the world’s first publicly traded crypto-asset broker, Voyager Digital has established itself as a leading crypto trading platform in the US. Voyager offers trading in over 70 crypto assets, with the opportunity to earn rewards of up to 12 percent annually on more than 35 cryptocurrencies. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both retail and institutional clients around the world.
Over the last year, the company has seen stupendous growth and is trusted by a growing user base. If you’re already a customer of Voyager or are contemplating using the app on your crypto journey, or a holder of the VGX token, read on as this post delves into the background of Voyager and its growth over the past few years, looks at its products and offerings, the native VGX token and what lies ahead.
Background & Company Overview
Founded in 2017 by a group of experienced and established Wall Street and Silicon Valley entrepreneurs, Voyager has seen rapid growth since. For a perspective, it currently handles an AUM of $7 billion (Source: January 2022 Investor Report). That’s grown from $230 million a year ago, at the end of December 2020.
Team: Voyager has a very experienced team. Here’s a quick overview of the founding members,
- Stephen Ehrlich: A brokerage and market structure veteran who founded Lightspeed Financial, a retail broker-dealer, where he was responsible for eight major acquisitions. Previously, Ehrlich was CEO of E*TRADE Professional Trading LLC, which was purchased by Lightspeed in 2006.
- Oscar Salazar: WIth experience in building consumer-driven mobile apps and experiences, Salazar is well known for his involvement in UBER as its founding Architect and CTO. He is also the co-founder of Pager. He is also a technical and marketing advisor to entities such as Rubicon Global Inc., ALEX AND ANI, Cargo X and others.
- Gaspard de Dreuzy: An entrepreneur who started his career as an advisor to Warner Music, he founded Kapitall, an online broker built in partnership with BNY Mellon and IHS Markit. He also co-founded fintech startup Trade.it as well as Pager.
- Philip Eytan: Started his career as a Telecom M&A Analyst at Morgan Stanley, then managed a distressed debt portfolio at Cerberus Capital. He has since been the founding investor in Livestream and Socure, and was an early investor in Uber. He also co-founded digital healthcare startup Pager.
The company has taken the path of acquisitions & mergers to expand offerings. In early 2019, Voyager agreed to buy digital wallet startup Ethos.io for about $4 million in a deal that gave the platform access to a range of products including the Ethos Universal Wallet and the blockchain platform Ethos Bedrock. In 2020, Voyager agreed to buy LGO, a French crypto exchange primarily serving institutional investors, as it set its eyes on an expansion beyond the US. In 2021, in a bid to enter the space of making payments with digital assets, Voyager acquired Denmark-based crypto payment platform Coinify in an $85 million deal.
Being a publicly listed company, Voyager does disclose quarterly business highlights. As seen from the chart below, the last year has been strong in terms of growth. Assets Under Management (AUM) has grown from $0.23 billion a year ago to $7 billion at the end of 2021. During the same period, verified users of the platform have grown from 0.15 million to 3.23 million. Preliminary total revenue for the calendar year 2021 is estimated to exceed $415 million as against $6.6 million for the calendar year 2020. (Source for statistics: Invest Voyager Press Releases)
A quick take on how Voyager works
Voyager operates as a broker, offering institutional and private investors a platform that lets them trade across multiple exchanges and OTC liquidity providers through a single access point. The platform prides itself on operating cost-efficiently so that users are free from paying any commission to it. To do so, Voyager uses a Smart Order Routing system that determines the best execution price to buy and sell a crypto asset across different crypto exchanges.
Voyager calculates the best price by scouting over 12 exchanges and market makers. The basic business model of this system is that when the platform finds a better deal for the user (think, highest sell price or lowest purchase price), it retains a fraction of the price difference as its own profit.
Understanding the Smart Order Routing:
Through the Smart Order Routers (SORs), Voyager has brought the Best Execution, as guaranteed by National Best Bid and Offer (NBBO), a regulation under SEC Rule 611, to the crypto market. The easiest way to understand Best Execution is by borrowing an example from Voyager’s site: Market volatility often leads to price differences across exchanges. For example, during the 2017 BTC bull run, prices of Bitcoin on American exchanges topped out near $19,500, while the Korean markets hit $25,000 USD (Coindesk). Voyager’s smart order routing engine takes advantage of this type of price discrepancy by finding the best execution route each time, by scouting for the same across exchanges.
When a user clicks ‘Buy’ or ‘Sell’ on Voyager, their trade is sent to a Smart Order Router that uses advanced algorithms to determine the type, size, and potential market impact of the order. The smart order router technology then searches multiple exchanges and liquidity providers to fill the order quickly and to the user’s cost advantage.
Here’s a look at some of the products Voyager offers
The App
One of the mainstay products of the platform is the Voyager App. This allows users to,
- Buy & trade over 70 digital assets
- Automate investments, including setting up recurring buys and/ or limit orders
- Earn rewards on holding assets
The Voyager app is currently available only to US residents of 49 states and all US territories, with the exception of New York.
The App has over 1 million downloads on Google Play and enjoys a rating of 4.5, based on 23,212 votes. It enjoys an even higher rating on App Store at 4.7 with nearly 96,000 ratings.
Voyager Debit Mastercard
Currently open for early access, the Voyager Debit Mastercard is a USD Coin (USDC) backed debit card which gives users the power to easily spend USDC like cash and earn rewards on the balance in their Voyager account. There is no date given out around the launch of the card. Some of the features the card promises,
- Earn up to 9% in annual rewards
- Works where Mastercard is accepted
- No card fees
Voyager Earn Program
A form of secondary staking, this lets users earn rewards on select assets when they hold a minimum monthly balance in their Voyager account. For example, holding a minimum of 20 DOT (Polkadot tokens) invites a reward of 12% annually. Here’s a look at some of the rewards currently offered on Voyager,
Rewards in the Voyager Earn Program are paid out monthly.
Fee Structure
As stated earlier, Voyager boasts of a 100% commission-free platform, thanks to the Smart Order Routing. Voyager takes a fee on a spread-based mechanism with the user getting charged only if they make a profit. While this is a clear advantage over competitors, the lack of transparency has led to some legal hurdles. The company was recently sued over allegedly hiding the fees involved. The case is ongoing and Michael Legg, chief communications officer at Voyager, has called the action “absolutely spurious and without any merit”. The platform charges a withdrawal fee, though, which varies from coin to coin.
The VGX token
The Voyager Token (VGX) is the native utility token of the Voyager ecosystem. VGX has its roots in the Ethos Token, launched in 2017. As stated earlier, Voyager acquired Ethos.io in 2019 and the Ethos Token was re-branded as the Voyager Token in early 2020.
VGX has been designed to reward Voyager customers for their loyalty, for holding VGX in their Voyager accounts. With a circulating supply of 278.48 million tokens, at the current market price of $2.57, Voyager has a market capitalization of $717 million (Source: Coinmarketcap). Holding the VGX token boosts crypto earning potential on the platform in a couple of ways:
- Stake VGX to earn up to 7% staking rewards
- Participating in Voyager’s loyalty program can boost earnings on other cryptos, get crypto back rewards, and more.
Here’s a look at the loyalty program at Voyager,
Holding 500 VGX tokens (qualifying the user to be an Adventurer) in the app, for example, automatically invites annual staking rewards of 7%. Besides, it also boosts yield rewards on select tokens by 0.5%.
Web staking VGX is a fairly straightforward process and can be done here. Compatible with the MetaMask wallet, tokens can be staked to earn a 7% APY.
Voyager Security setup & Insurance
One of the big advantages Voyager has over competitors is the fact that it is a publicly listed company with audited financial statements and hence is already subject to a higher degree of scrutiny.
Cryptocurrency held on the Voyager Platform is not protected by FDIC insurance or any other government-backed or third-party insurance. However, USD held by a client on the platform is FDIC insured to the tune of $250,000.
Voyager Community & Support
Voyager has an extensive community active across its social channels, primarily being Twitter, Reddit, Facebook, and Linkedin. Its Twitter account has over 135K users and the team does a good job in keeping the community informed here. The platform also has an active blog called Node which has a number of posts covering the product, education, team, and so on.
Voyager Vs Competition
For the purpose of this article, I’ve compared Voyager to Coinbase. Fundamentally, these are two different businesses, Voyager being a crypto broker and Coinbase being a crypto exchange. The idea, though, is to provide a perspective across a few criteria:
Supported assets: Voyager supports over 70 assets, while Coinbase supports in excess of 140 assets.
Wallet: Voyager offers a custodial wallet. Coinbase offers both, a custodial wallet and the Coinbase Wallet (non-custodial).
Staking / Earning Program: Voyager has a clear advantage here with yearly interest rates of up to 12%. Coinbase offers up to 5% interest on staking.
Transaction fee on a $1000 purchase of Bitcoin: Nil on Voyager; 1.49% ($14.90) on Coinbase
Withdrawal fees: Voyager can have higher withdrawal fees as compared to Coinbase. For example, withdrawing a stable coin USDC can attract a withdrawal fee of 35 USDC on Voyager. Coinbase has a fee of approximately 8 USDC. (Source: Fool.com; Cryptofeesaver)
Conclusion on Voyager
Voyager has clearly established itself as a leading digital assets broker. With its unique smart order routing model, enabling a commission-free trading service, coupled with a wide range of cryptocurrencies on offer (for a perspective, Robinhood Crypto offers buying and selling in only seven digital assets), Voyager does boast of a strong product. Furthermore, the company has to its advantage the added benefit of being publicly traded and backed by a strong team. The platform is well recognised for its ease of use, which reflects a growing user base.
Voyager also has on offer an easy and rewarding passive income program. While currently limited to the US, the company is in the process of expanding globally. It is aiming for a European launch towards the end of the current quarter. As it expands globally, though, competition is bound to be stiff. It would also be interesting, as a user, to see how the platform expands its passive income program and APY offered to counter competition. Some other areas that can be beneficial for users would be expanding the product offering to include access to services beyond just the app (think desktop access) and even a self-custodial feature.