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They should make money in the same way that the New York Stock Exchange does - by taking a small fee from every trade.
by benjaminwootton 4y ago
They should make money in the same way that the New York Stock Exchange does - by taking a small fee from every trade.
- flanked-evergl 4y agoI'm not aware of any crypto exchange that does not charge some manner of fees.
- nannal 4y agoThere are some 0 fees exchanges, often requires significant volume or occasionally it's for limited periods and/or on a small list of pairs, but I wouldn't be suprised that someone's running fractional reserve with an exchange and offers 0 fees because they make money elsewhere.
- rdtwo 4y agoYou have to be. There is no money to be made at 0 fee exchanges unless you lend the money out or give unfavorable swap rates
- hinkley 4y agoOr you're a front for money laundering.
- mccorrinall 4y agoBinance and bybit offer 0% fees on spot, but you usually want some kind of leverage, so you pay interest in your margin loan. If you are not a small retail and want to trade crypto, you usually need to use futures - which are associated with fees - because of liquidity and tighter spreads.
- 867-5309 4y agoit costs them money to exchange, and they add profit on top of this. the "0 fees" are therefore the sum of these masked in an inflated exchange rate
- lxgr 4y agoThat's not how an exchange works, though. Exchanges provide the infrastructure for trades to happen (i.e. they maintain order books, match market orders against these, ensure that settlement will eventually happen etc.), but do not take on financial positions themselves. The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand. So if an exchange makes money, it needs to charge at least some of its participants for these services. That can happen through transparent fees, or through less obvious mechanisms (like making retail trades free, and charging an exclusive market maker for the privilege of that exclusivity).
- 867-5309 4y ago>The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand. if that were true then all exchange rates would be uniform across all providers
- lxgr 4y agoWhat do you mean by "providers"? Different exchanges? Long-standing price differences are usually reflective of market inefficiencies that can't easily be arbitraged away, such as difficulties funding a given exchange account, insufficient volume to make it worth trading there, or many others.
- DebtDeflation 4y agoCrypto exchanges are more like a bank grafted onto a hedge fund that happens to also do some exchange stuff on the side.
- oldgradstudent 4y agoRecent collapses have shown that Crypto exchanges are more like a casino grafted to a Ponzi scheme.
- pclmulqdq 4y agoWhich is remarkably similar to a bank grafted to a hedge fund.
- oldgradstudent 4y agoThere's a reason why Glass-Steagal prohibited grafting banks to hedge funds.
- hinkley 4y agoDon't underestimate the power of the veneer of legitimacy. Also you're completely wrong here. Banks aren't a ponzi scheme. That's the stock market.
- giancarlostoro 4y agoThis is how CoinBase works basically.
- asah 4y agoum, that's exactly what they do.
- fallingknife 4y agoThat's how they made their money for most of their existence, and how crypto exchanges still do, but not anymore. The NYSE actually makes most of its money now by charging for colocated server space which HFT's use to get super low latency connections to the market.
- notamy 4y agoWait, really? That sounds weirdly counterintuitive. Do you know if there's any public information about this? The only thing I could find from a quick search was [0] which doesn't provide a huge amount of info... [0] https://www.reddit.com/r/algotrading/comments/2c1r4e/how_much_does_it_cost_to_rent_stock_exchange/ https://www.reddit.com/r/algotrading/comments/2c1r4e/how_muc...
- humanistbot 4y agoTake a read through the 10-K for the NYSE's parent company, Intercontinental Exchange, Inc.: https://www.sec.gov/Archives/edgar/data/1571949/000157194922000006/ice-20211231.htm https://www.sec.gov/Archives/edgar/data/1571949/000157194922... OP is wrong though. Their entire data and hosting revenue is $838m, but more traditional listing and transaction fees make up the rest of their $3.8b revenue. So basically 20% data and hosting, 80% classic exchange profit: https://www.sec.gov/Archives/edgar/data/1571949/000157194922000006/ice-20211231_g12.jpg https://www.sec.gov/Archives/edgar/data/1571949/000157194922...
- fallingknife 4y agoI read this about the NYSE in particular years ago. I make no claims about overall ICE revenue.
- hinkley 4y agoAnd you've just described the 'regulatory capture' of HFTs. Wow.
- fisherjeff 4y agoAh but think of all the money that leaves on the table!