How does a NuBit exchange make money?

The Plaza
#1

I am wondering about the profitability of a NBT exchange:

Parameters:

  • Trade fee (percentage on all trades)
  • Spread between sell and buy orders
  • Trade volume
  • Withdrawal fee
  • Deposit fee

So let us say that one exchange has 1m NBT of trade volume per day.
If the trade fee percentage is 0.2% that means that the exchange gets 2000 NBT as commission every day.
That would be certainly profitable.
The spread is a parameter set by a marker marker so it cannot contribute to the revenues of the exchange since the exchange is not a market maker.
I suppose that the withdrawal fee and the deposit fee accumulated over 24h are negligible, relatively.

Thus, my point is that the main revenues source of an exchange is the trade fee.
Am I right?
In that case, at current levels, running an exchange focused on NBT is certainly not profitable.

EDIT: Revenues should be 0.2%*1m NBT * 2 since the exchange takes a commission on each side of the trade, (sometimes taker % != maker % though)

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#2

In theory, if Nu achieves enough market penetration and revenue of the network has enough excess, it may be prudent to create a zero fee exchange. This of course would be funded by the Nu shareholders. The loss in the cost of the servers could be more than made up by the influx of demand for Nu at (imo) a “true” 1 nbt to 1 usd peg.

#3

That is a nice idea indeed.

But to get back to my original questions, do you think the following is correct:

Revenues should be 0.2%*1m NBT * 2 since the exchange takes a commission on each side of the trade,

in general?

#4

Yes you are correct if trading fees are the main sources of revenue. I’m not entirely convinced that has to be the case. Other revenue models can be explored to fit our unique circumstances.

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