Customer Owned Exchange

[Lucusfoundation]

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for the participation and collaboration on the Ethical Mining, Public Benefit Corporations and Cryptocurrencies disrupting the future economies threads.

As part of a deeper talk, we'd love to discuss with you, the community, the following subject:

Community owned cryptocurrency exchanges/platforms

Thinking about how a crypto business can directly beneficiate a cryptocurrency business, we were thinking about different economic and social incentives to users.

In the discussion, this topic surged.

What are your thoughts on a platform that payed equity to their users for usage, loyalty and referrals? Creating a long term incentive on the usage of services, by rewarding them with ownership in the business, which, in the case of thriving and more people using it, those same users would accumulate more value?

What do you think about it economically wise, what do you think about it ethically wise. Do you think it's possible with our current paradigm?

Yes, no, why?

Best of all to you

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[dothebeats]

So in other words, a charity exchange platform wherein the operators wouldn't get anything in return and those who are pretty much using the platform since the beginning will have higher loyalty perks than those with traders who trade in with high volume but shorter time? I think the reward system would be chaotic, and the setup is pretty much like a cooperative platform wherein the community chimes in a percent of work done and receiving the dividends/profits after. It would be a nice system if it would be done for charity but for a business model? I don't think it will play out pretty well.

[d5000]

Well, an exchange that "payed equity to their users for usage, loyalty and referrals" is not necessarily a "customer owned exchange". It may have some participation in ownership, but in your model there would be still owners with a majority share, or not?

Actually I consider the model of a "customer owned exchange" interesting because of the implications regarding the stability of the exchange landscape (it would be almost impossible to run an exit scam there), and thus I would love to see it realized.

However, for this to happen, the goal for the participation of customers/users in ownership should be at least 50%, so they can block decisions of the owners which they consider against the interests of the customers. There may be an initial "buildup phase" where the owners coordinate and organize, but for the long term the majority of shares should go to the customers.

[n0ne]

Well, an exchange that "payed equity to their users for usage, loyalty and referrals" is not necessarily a "customer owned exchange". It may have some participation in ownership, but in your model there would be still owners with a majority share, or not?

Actually I consider the model of a "customer owned exchange" interesting because of the implications regarding the stability of the exchange landscape (it would be almost impossible to run an exit scam there), and thus I would love to see it realized.

However, for this to happen, the goal for the participation of customers/users in ownership should be at least 50%, so they can block decisions of the owners which they consider against the interests of the customers. There may be an initial "buildup phase" where the owners coordinate and organize, but for the long term the majority of shares should go to the customers.

It is same as the crowd funding for projects, if at least 51% contribution need to be from the customers to make it as customer owned exchange. In most of the cases the entire investment through customers or other investors won't go beyond the 49%, because 51% will be contributed by the owner taking the ownership. When 100% is left to the customers as investors it is concept wise good. On implementation when some issue arise every customer is answerable which isn't fair. To this some solution need to be achieved to make this plan more successful.

[joniboini]

In my mind, 'customer owned exchange' pretty much open-sourced Forkdelta. Anyone can use and contribute it, no need for registration or KYC thing like that, and it doesn't require centralised server to run but more or less decentralised node where forward transactions, bid, orders etc. So essentially, it's like Bitcoin network but the usage is for connecting peers to trade.

Agree with dothebeats, what OP talk is not really "customer owned exchange" but "exchange for profit sharing". More or less like it.

[gowobonyok]

just agree, it will make the community more solid to trade. I also think that the provision of futures rewards by the project is good for making the project better known by the wider community.

[Kakmakr]

Paying equity to the users for usage must be capped to prevent a single individual or a small group of people gaining majority control over the exchange operations. Just imagine if a rival or some investors with big pockets can get too much influence on the general operating decisions of the exchange. <Supporting scam coins and/or IEOs for instance>

How can you prevent a hostile takeover scenario to protect the basic operating policy of the exchange?

[d5000]

In my mind, 'customer owned exchange' pretty much open-sourced Forkdelta. Anyone can use and contribute it, no need for registration or KYC thing like that, and it doesn't require centralised server to run but more or less decentralised node where forward transactions, bid, orders etc.

Forkdelta is only a smart contract platform on the Ethereum network. It doesn't support the exchange of different cryptocurrencies on different blockchains, only Ethereum tokens (which are, in reality, Ethereum transactions). Different is the case of BarterDEX, but there you can only exchange cryptocurrencies, not fiat.

The problem Bitcoin has is mainly not the connection to other cryptocurrencies, but to the "fiat world". The only decentralized model that currently achieves fiat<->BTC exchange without centralized intervention (and regulation) is Bisq, but it has a number of problems (reliance on security deposits, theoretical possibility of escrowers collaborating with scammers). It is impossible to cryptographically prove a fiat transfer has ocurred, so a "perfect" decentralized variant won't exist (at least if there is no "cryptocurrency" variant of a fiat currency).

So the model the OP proposes is an interesting "compromise" between the centralized and a more decentralized model, because it doesn't have the limitations of Bisq or traditional DEXes and can solve the fiat<->BTC exchange problem without the risk of an exit scam. Maybe it could be even governed in a transparent, blockchain-based way (like a DAO) so there is even less risk of a scam by the platform owners.

[Kevin77]

It is both risky and rewarding at the same time. I mean if the exchange customer owned than who is working on the exchange ?

There needs to be sort of a general manager that runs the company and developers and security specialists and designers and stuff like that even pay for support. This means there is a company to be run to be precise. Now if you give the all power to the customers for everything than you are removing that company, who will be the running the exchange? Who will pay for the support people? Who will pay for the technical people ?

Hence, you can build an exchange that is half customer owned but not fully customer owned. There has been a lot of tries for half customer owned, just an example from the biggest exchange in the world Binance gives you a lot of shares for your affiliates moves for example, it used to be as high as 50%, now I think its 20%. There are others with similar mindset.

[kryptqnick]

The idea of an exchange that not only rewards customers but is community-owned sounds interesting to me. This could solve the trust issues (if one person is an owner, not much is preventing him/her from scamming everyone at some point), help with recognition of the interests of the customers (it's more likely with this approach that feedback will really lead to changes) and encourage active participation of customers in decision-making (this is contributing to something like civil society). However, it also leads to important questions: how many people will actually take part in operating the exchange? what would be the criteria of choosing these people? how would consensus on important matters be reached? Would there still be an official owner/ someone who is higher in the hierarchy?
In case it's possible to make an exchange where monopoly of a small amount of people in making decisions and basically governing the exchange will be avoided, it might be a great project.

[riritsurya1202]

In case it's possible to make an exchange where monopoly of a small amount of people in making decisions and basically governing the exchange will be avoided, it might be a great project.

As long as it doesn't have additional tokens or coins like those ICO/IEO project I think it's fair. Tokens or coins will create additional problems, let's just use atomic swap without anything new.

[rose9696]

I think it will be fine. I don't know much about your whitepaper, but the best method is to reward loyalists. You know, there are many ways to cheat in increasing referrals. Your business will be at a loss and will not have any benefit from awarding or creating an increase referrals campaign.

[Reid]

It already came from you. Those are incentives and not really owned by users.

But to summarize it I think it is good enough than nothing.
Referral programs though doesnt work much anymore. Hell, up until now I dont have one. Before it does work but not at this timeline.
It may be better to look for something new.
Giving shares or loyalty programs might be the answer and that is also to keep them from selling their shares.

Good luck.

[Stavri]

i do not understand exactly what customer owned exchange is. but i dont like the idea that an exchange that i use is being owned by anybody. what about decentralized exchange platforms? arent they better?

[palle11]

Are you looking at outright partnership by any customer who uses the exchange. More like any user automatically becomes a partner that shares from the proceed of the exchange. Is it like the same uniform share for every member or based on the level of financial involvement to the exchange? Well, I just see the picture of a partnership from your topic.

[leonair]

i do not understand exactly what customer owned exchange is. but i dont like the idea that an exchange that i use is being owned by anybody. what about decentralized exchange platforms? arent they better?

Is there any crypto exchange out there that don't have an owner? we all know that all of the exchange have an algorithm to operate but it's still needs a manual operation of someone.

I'm thinking what would be the edge of this so called Customer Owned Exchange as no one would fund it or even maintain it for free.

[Zadicar]

i do not understand exactly what customer owned exchange is. but i dont like the idea that an exchange that i use is being owned by anybody. what about decentralized exchange platforms? arent they better?

Is there any crypto exchange out there that don't have an owner? we all know that all of the exchange have an algorithm to operate but it's still needs a manual operation of someone.

I'm thinking what would be the edge of this so called Customer Owned Exchange as no one would fund it or even maintain it for free.

I hope there is but I'm thinking what would really be the edge on it since you are the only one who controls it. How could you trade with other people if you are the one that's controlling it? Seems like an impossible task yet needs to discuss on how this could actually work.

[alisafidel58]

i do not understand exactly what customer owned exchange is. but i dont like the idea that an exchange that i use is being owned by anybody. what about decentralized exchange platforms? arent they better?

All exchanges are own buy a certain person. Have done any research at all? I like the idea since I think that every shareholder holds a key so that the coins there won't just come to waste especially when an unexpected thing happen to the one holding the key just like what happen to the Canadian exchange which its owner dies.

[Naida_BR]

The dividend incentive is the best feature to keep the community engaged.
I can see many new project which use that keeping a stable usage of their platform and more users strive to introduce new members in the case of using the platform.
I think that this idea is great, but you should consider what if the platforms are held by the few? This may cause a short of centralization.

[Ailmand]

It would be a big advantage if there would be a customer-owned exchange but how are we going to assure the security of it if everyone would use it and no one would manage its safety? I would still go for a decentralized exchange because I find that idea too risky for traders.