Nigerian crypto startups built their businesses on facilitating the buying and selling of digital currencies for retail customers. Now, that may no longer be enough.
The country is one of Africa’s largest crypto markets. Yet, at least two operators say competition is compressing margins. Costs do not fall with volume, and the customers driving the most revenue are hard to retain.
Peer-to-peer (P2P) trading became a lifeline for Nigerian crypto users after the Central Bank of Nigeria (CBN) barred banks from servicing crypto transactions in 2021. It forced local startups to find workarounds as global platforms like Paxful, a P2P marketplace that has since shut down, and Binance competed for the same users.
Nigerian startups began offering a broader range of products, including P2P and bill payments, around that time. The serious push into stablecoins, B2B payment rails, futures, and more complex financial products accelerated from 2023 onward to diversify income beyond the volatile retail cycle. Recently, that strategy has become more pronounced.
Several crypto startups operating in Nigeria, including Busha, Roqqu, Dantown, Luno, and Blockchain.com, have all expanded beyond retail crypto trading. Startups like Yellow Card have shut it down entirely to focus on the B2B side of digital currencies, signalling that the pressure on retail margins is acute enough to force a complete strategic pivot.
The maths behind a single trade
The unit economics of running a crypto retail trading business begin with one trade.
On a typical $100 retail transaction, the gross revenue a platform earns ranges from about $0.3 to under $1.40, three crypto startups told TechCabal.
One founder, who asked not to be named to speak freely due to the sensitivity of the details being disclosed, breaks this down: a 1% transaction fee earns $1, while foreign exchange (FX) spread on the naira conversion adds roughly $0.35. After deducting direct costs like payment processing and liquidity, gross profit exceeds $1.25.
Another operator, who also spoke on the condition of anonymity, said that gross profit after all costs is $0.30 to $0.50, reflecting the startup’s leaner, flat-fee pricing model with zero spread.
In normal market conditions, a startup keeps between 0.5% and 1.6% of every transaction, a figure known as the blended take rate. During volatile periods, when spreads widen, that range climbs to between 1.6% and 2.3%, according to the three startups.
One startup charges a fixed flat fee regardless of market conditions; others run tiered models from 0.35% to 1% depending on trade size.
The cost side is where things get complicated.
Running a regulated crypto trading platform means carrying expenses that do not shrink when trading slows: staff, security, compliance, banking and payment partnerships, and the infrastructure needed to move money reliably. These costs are largely fixed regardless of the number of trades a platform processes.
When retail trading activity slows, revenue falls, and sometimes becomes disproportionately lower than these fixed expenses, according to the three operators who spoke to TechCabal.
“While certain costs scale down with lower activity, a significant portion of the cost base is fixed or semi-fixed,” said Joshua Avoaja, chief technology officer and co-founder of Azza, a Nigerian WhatsApp-based crypto payments startup that said it has processed over $17 million. “Costs don’t compress proportionally during periods of lower trading volume.”
A typical active retail customer makes between two and six trades a month—rising to eight during market peaks—and spends between $13 to $15 per trade, according to the range provided by the three operators.
Taking the midpoint—about four trades monthly at $14 per trade—and applying the take 1% take rate, a crypto startup would earn about $0.56 per customer per month in gross revenue.
Set against a customer acquisition cost (CAC) of between ₦8,000 and ₦22,000 (about $5 to $14), recouping that investment on the average user spans between nine months and over two years.
For a business solely dependent on retail trading, it needs a deep runway to sustain its operations.
“[Crypto retail trading] is a solid but structurally constrained business,” said Avoaja. “Customer acquisition costs are relatively low, gross margins on individual trades are healthy, and demand has proven resilient. But there are limitations. Monetisation is uneven across the user base, with a smaller cohort of highly active users driving a disproportionate share of value.”
The business works with sufficient scale, but it has real limits as a standalone product, Avoaja said. Those limits become clearest when you look at who actually moves the revenue needle.
High-frequency retail traders called ‘power users,’ make between 20 and 30 transactions monthly and generate a disproportionate share of platform revenue, said Avoaja. These are the customers every crypto startup wants to keep.
Yet, they are also the most demanding customers: price-sensitive, quick to move to a competitor offering tighter spreads, and unforgiving of downtime or rate inconsistencies. Retaining them is not a growth problem; it is a reliability problem.
Despite the margin compression, Emmanuel Peter, Head of Trading and Markets at Roqqu, a Nigerian crypto exchange, said retail trading remains “a great business” for the startup.
Crypto Breakeven Calculator
Analyze the unit economics of retail trading
Data Source: TechCabal Research (Assumes 1% blended take rate & $1.25 avg gross profit per $100 trade).
Why building beyond retail trading makes economic sense
The trading business is cyclical. Volume peaks in December and March, the former driven by end-of-year remittances and bonuses, said Avoaja.
These peak periods can deliver 50%–100% more volume per user than slow months, driven primarily by larger transaction sizes rather than increased frequency, he added.
During bearish stretches or low-activity periods, users transact more deliberately: fewer trades, more intentional, and with a slight tilt toward off-ramping (converting crypto back to cash).
For platforms whose revenue is entirely tied to that cycle, the income curve is lumpy and hard to plan around, making the case for expansion beyond retail trading more sensible.
Some platforms are moving into payment-driven use cases: utility bill payments, airtime top-ups, and other everyday financial services that generate activity independent of whether Bitcoin is up or down.
While retail trading features remain a mainstay in most Nigerian crypto startups, expanded product lines are quickly becoming “convenience features” during off-peak periods, said Avoaja.
According to three operators who spoke to TechCabal, these expansive products are still early in monetisation.
But the logic behind these product add-ons is to keep trading activities flowing even during slow periods. Every time a user pays an electricity bill or buys airtime through the app, they are keeping their balance on the platform, reducing the chance of churn, and building a habit that survives a bear market.
Dollar virtual cards have emerged as one of the higher-margin products beyond trading, said Chimene Chinah, chief executive officer of Dantown, a Nigerian crypto payments startup. Dantown counts cards among its most profitable offerings outside its core buy and sell business.
“[Cards] increase retention because users no longer need to move funds off our platform to access the feature,” said Chinah.
Cards keep money in motion on the platform. Users who spend via a virtual card have little reason to withdraw their balances elsewhere. Retention goes up, balance float improves, and the card itself generates interchange revenue that does not fluctuate with crypto prices.
Futures trading is another lever. Roqqu, a Nigerian crypto startup, designed its futures offering to give customers trading opportunities even during bear markets, a way to keep the trading engine alive when spot markets—regular crypto buying and selling—slow.
Crypto-backed loans serve a similar counter-cyclical function: by allowing users to borrow against their holdings rather than sell them, platforms can discourage sell-offs that reduce trading volume and thin the order book.
A savings feature designed to encourage holding stablecoins creates sticky balances that also survive a downturn.
The pattern is consistent across all three operators: each new product is engineered to either smooth the revenue cycle, extend the time a user’s money stays on the platform, or open an entirely new monetisation surface. The trading product acquires the customer; the expanded product suite justifies keeping them.
The OTC problem and its promise
Most Nigerian crypto startups operate over-the-counter (OTC) desks alongside their retail platforms. These desks serve a different customer entirely: institutional buyers, small businesses, high-volume individual traders commonly called “whales,” and other crypto startups that need to move large amounts of liquidity without going through an exchange’s public order book.
Most of these trades happen off-platform, according to two operators. Some platforms provide a dedicated channel or webpage where prospective buyers submit their information and complete know-your-business (KYB) checks before any trade is confirmed.
The economics here work differently from retail. When a platform sources, say, 100 Bitcoins from an exchange at a known rate, it can calculate with reasonable precision the spread it stands to earn by selling to a set of clients, as long as rates hold steady over the settlement window.
The spread itself is thinner than retail: platforms earn anywhere above 0.3% in gross terms, but after accounting for the exchange’s own spread on the sourcing side, net margin can compress to as low as 0.1%.
Yet, the transactions are large, so even a 0.1% margin on a $500,000 trade is $500—nearly twice the amount of revenue a startup would generate from serving 500 retail customers and earning the median blended take rate.
OTC revenue is not a function of how many users downloaded the app last month or whether the market is in a bull or bear phase. It is a function of client relationships, pricing discipline, and reliable execution: variables that a well-run desk can control in a way that retail volume simply cannot.
But the OTC market has its own structural problem: it is crowded.
“The market is saturated,” said Peter. “Your margins have to be as tight as possible.”
OTC desks have proliferated across the Nigerian crypto ecosystem, and competition has driven spreads to their floor. The desk that wins a client is often the one willing to accept the thinnest margin.
For platforms trying to use OTC as a buffer against retail volatility, this is a real constraint; the buffer itself is under compression.
The OTC market does not offer a high-margin escape from the pressures of retail trading. It offers a different kind of pressure: predictable but tight. For a business trying to build something durable out of the Nigerian crypto opportunity, “predictable but tight” is still better than “unpredictable and cyclical,” said Peter.
Nigerian crypto startups are building their businesses on the same bet: that Nigeria’s crypto market—already one of the largest in Africa by volume, growing year-on-year—is big enough to sustain multiple revenue lines, and that the platforms which last will be the ones that figure out how to make money beyond retail trading.
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