We invest in coins with the hope they’ll appreciate in value when we eventually decide to sell. The model has worked tremendously for some, but also prompted sharp criticisms of a Greater Fool’s game, or worse, a Pyramid Scheme.

This conundrum has inspired many investors, myself included, to explore coins that actually return something besides an increase in value. I recently covered Quantstamp (QSP) and now discovered another promising dividend-paying asset:

KuCoin Shares (symbol KCS) pays daily bonuses to its investors. Right now, the amount is fairly small (~$0.15 USD per day for every $1000 you invest), but, as I’ll outline below, it’s possible this could grow exponentially throughout 2018.

KuCoin vs. KuCoin Shares (KCS)

Kucoin.com is a cryptocurrency exchange that specializes in many unique low-market cap altcoins, as well as the tried-and-true giants. With over 70 coins to trade, it’s similar to its fellow Hong Kong-based mega exchange Binance, except Kucoin is much newer, and carving its niche with some unique offerings.

For one, it lists respected-yet-underground coins like DragonChain and Bounty0x, which have yet to make it to the major exchanges. Secondly, it has some of the lowest trading and withdrawal fees.

Thirdly, and more to the point of this article, it offers dividends to users who hold their native trading token: KuCoin Shares (symbol KCS). Everyday, Kucoin distributes 50% of trading fees to KCS hodlers — known as the KuCoin Bonus. What’s more, you don’t just receive it as KCS tokens; you receive it in the form of each coin that was traded that day. In other words, you’ll get small amounts of 70+ coins every day, including whatever new coins are added down the line.

Kucoin pays fractions of each of these coins to KCS holders.

KuCoin (KCS) Bonus Earnings Estimate

Right now, holding 1 KCS earns you approximately $0.002 USD per day, or $0.73/year. You can use this calculator to check current estimates.

Admittedly, this isn’t a whole lot considering KCS costs ~$12/piece. However, this payout is likely to increase throughout 2018 for 2 key reasons:

As more people use KuCoin, more trading fees are collected, and thus the size of payouts will increase. Because your dividends are paid in the form of 70+altcoins (and growing), you’re likely to see some gain value, with some potentially skyrocketing throughout 2018.

Below are a few estimates adjusted for these factors. I’m no math whiz, and had to keep my formulas simple (e.g. no compounded interest), but use these to make some rough estimates how much you could earn:

High Estimate: $30 in dividends per KCS

Let’s say KuCoin grows wonderfully over the next year and ends with a $5b daily volume, close to where Binance is right now. We could estimate your annual payout would be closer to $10 per KCS.

Now lets factor in your bags appreciating over the year, with new coins being added, and some taking off with exponential growth, and others growing modestly. While its extremely hard to calculate this with anything other than a gut estimate, I’m going to multiply the dividend by 3.

0.73 x 13 (growth of KuCoin trading volume) x 3 (growth of coins) = $30

If you bought 100 KCS, that could mean a dividend of $3000, plus whatever gains you get from KCS tokens themselves increasing.

Modest Estimate: $6 in dividends per KCS

Now lets say KuCoin experiences more modest growth, only growing to $1b by the end of the year. Furthermore, the bear market winds up being nastier than expected, and your bags grow at a lower rate.

0.73 x 4 (growth of KuCoin trading volume) x 2 (growth of coins) = $6

Again, this doesn’t include the value of KCS tokens themselves rising, which is very likely in a scenario where KuCoin is quadrupling in popularity.

Low Estimate: $0 per KCS

This is mostly just a disclaimer, but its always possible an investment like this could bust. Cryptocurrency exchanges have shut down in the past (It happened to Mt Gox in 2014, and more recently to Bitconnect).

There’s also some concern about KuCoin being registered in China, which has been particularly ominous about the legality of exchanges lately. Binance, by comparison, recently moved overseas.

Finally, KuCoin could simply stop honoring the KCS bonus. It’s not required to by any means, although shutting down the dividend would be PR suicide.

Is this enough reason to sound the alarm? Yes and no. I wouldn’t leave a major sum in KuCoin — or any exchange for that matter — without keeping an active eye on the market and crypto-news. But that’s simply the nature this world. You don’t get too comfy with any hold, and you only invest what you can afford to use. I personally wouldn’t consider KuCoin too much riskier than any other exchange at this point.

How to Use KuCoin.com

KuCoin is pretty intuitive if you’ve used any kind of cryptocurrency exchange before. Simply register and confirm your email address to get started. (Use my referral link and I’ll get a few small fractions of coins to help support my blog.)

Once you’re in, you’ll need to set up 2 Factor Authentication to begin trading. All you need to do is download the Google Authenticator app on your smartphone, scan the QR code on the screen, and you’re all set. Just remember to write that recovery code down and store it in a safe place.

Fund your account by heading to “Assets” > “Deposit,” then start trading by clicking “Markets.”

Like most cryptocurrency exchanges, KuCoin provides a detailed trading menu that you can mostly ignore as a beginner. Just find the boxes in the lower right corner that say “Buy KCS” and “Sell KCS.”

If you want the purchase to go through right away, click “Best Price” to pay the lowest ask price for KCS. Specify the amount of KCS tokens you want to buy under “Amount” (or simply say click “Max” to buy the maximum amount you can afford) and finally click “Buy.”

How to Buy KuCoin Shares (KCS) with USD or EURO

KuCoin does not currently have a direct link to fiat currencies like USD or Euro. Instead you’ll need to buy Ethereum or Litecoin first, then send this over to KuCoin to buy KCS.

Fortunately it’s pretty easy at this point to buy Ethereum or Litecoin — you can pick some up on Coinbase in just a few minutes. For instructions, check out my other Medium guide: How to Buy Ethereum or Litecoin Instantly.

Note: This blog is not intended to serve as personal financial advice — this is simply the opinions of a business writer and amateur cryptocurrency trader. Don’t invest more than you can afford to lose. If you do decide to purchase KCS, please use my KuCoin and Coinbase referral links to support this blog. Thank you!

If you’re interested in checking out other coins that pay a form of dividend, check out my guide on Quantstamp (QSP), which rewards holders of with airdrops of various ICOs.