The title is a bit exaggerated, but I want to bring up some points on how the crypto market has been structured and how Chainge is different from that, and how that fact might enable Chainge to do some things that seem “too good to be true”.
I’m going to start by dividing market participants into the following broad 9 groups. Centralized Exchanges, VC Firms, Retail Investors, Market makers, Influencers, Projects, Crypto company employees, Indie Developers, Media and General Public.
Let’s analyze all the groups with Centralized Exchanges as a kind of focal point.
Initially the exchange was probably funded by VC Firms that put in the capital neccessary to get it going. Afterwards, they might or might not have gotten additional funding from retail investors in an ICO, before launching the exchange. Most exchanges that people use will have evolved far beyond that point that it no longer matters exactly how the launch happened. Either way most exchanges are no longer reliant on initial funding, they must simply assure themselves to remain profitable, like any company.
The main point of income is retail investors that are trading on the platform, collecting fees on each trade. But in order to get retail investors to do this, there are a number of things that need to happen first.
There needs to be listed tokens related to various projects that the retail investors are interested in trading. Luckily at least some exchanges have found that projects very much would like to see various tokens listed on their exchange and even be willing to pay a lot of money for this. Either in their own, token, a stable coin or both. Success here is being stingy on who you list and then overcharge it as much as possible, maybe with fake discounts and NDAs sprinkled ontop. The point is exchanges charge a lot for listing, and in most cases it will be money that at one point first came from retail investors invested into the project ICO.
The next requirement is market makers. You might think the exchanges generally arrange for these? That’s usually not true, though they might have certain agreements with market makers that make them able to execute trades without paying any fees. But generally the market makers will be employed by the projects, and they normally work for a great number of projects at the same time. Strangely enough there is very little “trustlessness” in Market maker relations. They will normally operate under regular good old “trust” and be given charge of funds by the project to operate and be paid a salary ontop of this. The job of market makers is to make the project interesting to trade. The cheapest way to make things “interesting” is of course creating “dips” for the tokens they’ve essentially been handed for free. The very nature of the setup makes them value what is traded against (usually USDT or BTC) higher. Still without Market Makers there would just be pretty empty orderbooks that nobody would probably want to get involved with. However you look at it, this is an additonal high cost for projects to try and cover. Exchanges don’t gain much from it either, unless it manages to actually attract enough retail traders/investors.
So in order to be more sure of this happening, Influencers are needed. Influencers are people who have made a business out of speaking out about crypto in various ways. They try to gain a lot of followers in various social media, and then hope to charge money from projects in order to write or speak about those projects, reccomending it to their audience. This can be the core of who they are, or a side-thing that helps them fund what they are doing in order to gain even more followers and influence. They can be key to bring real traders and investors into a project, so for projects it can make sense to use their services to some extent. But again, many of these charge extreme amounts of money that probably would surprise a lot of people. Market makers timing markets in coordination with influencer mentions, can probably be one of the most effctive ways to get a lot of real trading/investing happening. Media can also at times get involved in a similar role as influencers, but it’ll generally be broad stroke and not project specific and focused on the crypto market as a whole reporting extreme gains or extreme losses in a euphoric or fearful way at all the wrong times, and savvy crypto market players can usually capitalize on it.
Now onto projects, which don’t only have the costs already suggested, but they also have costs (at least if they are not scams) to keep their developers on board and actually build something. Ideally this should be the bulk of their costs, but seeing how expensive some of the market related costs are that’s probably not always the case. Some projects might have quite high costs here though, since they not only pay their own developers, but also launch programs to bring other developers into their ecosystem, or pay for some service that they think will help them onboard a lot of new developers or even other projects. This is something that can be a neccessity to eventually prosper, but in the crypto industry it’s also a somewhat established merry-go-around where indie developers or even projects can jump from place to place offering new money and just reuse their work in a new place for additional funding. So projects who don’t watch out in this area could end up losing a lot of funds to very little benefit.
Exchanges tend to have a vast amount of crypto company employees compared to the majority of crypto projects, a neccessity to keep their operation secure, reliable and trustworthy, but at the same time something which comes at a very high cost. In order to finance it the exchange has to be successful, economically. This explains why the exchanges charge so much money from projects, and why they don’t generally finance the marketmaking. The employees will be taking care of things like support, project listings, influencer interaction, platform maintanance, legal compliance, investor relations, etc, etc.
The last group “the general public” is really never involved with crypto markets at all. It’s more like a “meaty bone” that projects or influencers can use to lure retail investors with as a mirage of mass adoption.
Now let’s look at how Chainge (and to an extent DEXs and DeFi in general) differentiates from all of the above. We can start out by ditching out what’s no longer needed (still from an “exchange perspective”)
- Market makers are no longer needed, because with AMM anyone can easily be a MM. Early DEXs have attracted people to do this with exurbeant rewards (they shouldn’t really need to be as exurbeant as they have been. In fact that only seems to scare people off in fear of mistaking generosity for scam). But in early cases it might just be that those savings represent real savings if compared to past MM costs.
- In a fully automated enviornment, where everyone always holds custody of their funds, not nearly enough employees are needed. In fact the only ones needed is probably the developers (various types, programmers, graphics/UI experts, chain watchers making sure everything is in order everywhere), some level of support to help product users but legal obligations are gone here since everyone has their own custody and also a marketing team to create awareness.
Those two are the obvious ones which really apply to all DEXs and Defi, but Chainge has ditched some more aspects that perhaps wasn’t as obvious to do.
- No VCs or ICO. Intial funding was entierly done by DJ Qian, and the CHNG tokens were given out for free in various ways. The first way was a social awareness campaign ran by early sign-ups (basically air drop hunters + early enthusiasts and project believers). These got 10% of the supply. Most of the rest has been handed out to product users, who provide liquidity TF assets or in some other way interact with Chainge.
- There was also a certain amount given out to influencer onboarding. Meaning Chainge users could be awarded if they helped onboard influencers to try out Chainge. So instead of actually paying Influencers, Chainge users paid influencers, who in turn got paid in case an influencer actually gave Chainge a try. Thus there exists no hidden agreements or rediculous payments handed out to various influencers, and the money that “normally” had gone to them, instead goes to Chainge users.
- Chainge lists crypto projects at no cost as fast as they manage to integrate them. While regular exchanges get a lot of money from the endevour, Chainge has chosen to do this for free, because it really means no additional costs for them and just helps to increase volume in various services like cross-chain roaming or DEX aggregation. It is clear that Chainge seems to have prioritized assets that already exist on multiple chains? Why? Probably because it’s where they are able to offer more than anyone else through the cross-chain aggregator.
- By choosing to adopt projects across all chains, and not just focus on evolving or bringing new projects to Fusion, there is very little costs surrounding the “ecosystem building” described above. The few projects that come to Fusion and build there, will usually be there entierly on their own choice and funded with their own funds. Something quite harsh compared to the rest of the crypto space, but also so much more admirable for those who choose to build on Fusion. And once everything is said and done, it’s going to be at the center of things since Chainge is in fact bringing every other project also to Fusion, whether they want to or not.
So — overall the point I wanted to make — is that DEXs and DeFi can cut out so many middlemen that it simply can afford to be more generous to us bold degens who dare to use it. And that is why it can work, and Chainge is doing it in more ways than anyone else.