The exchange would be used to determine the relative value of karma from different sites - like a currency or stock exchange. So if you wanted to track hacker

The exchange would be used to determine the relative value of karma from different sites - like a currency or stock exchange. So if you wanted to track hacker news karma with karma from reddit someone would have to be willing to trade with you, and they could set the exchange rate (i.e. 2-1, 1.63 to 1 etc).