Ross Zhang, general manager of Huobi Canada, pitched in with thoughts on decentralized exchanges (DEXs) during a panel discussion at the FinTech Canada 2018 conference. Amid all the excitement, he was a person with some sobering words to say.
“A lot of our revenue is based on transaction fees. So, how we view things is from the customer’s perspective. Right now in the market, a lot of speculators are not long-term investors. They will do frequent trades on the platform, and as of today, with decentralized technology, there are three different types of consensus mechanisms. Because the transaction speed for decentralized exchanges is not really good right now, they cannot support the transaction volume that we have as a centralized exchange. That’s why we still see the transaction fee as a thing that will persist for a while,” he said.
A look at transaction volumes on some of the world’s largest DEXs appears to offer evidence in support of Zhang’s statement. Even IDEX, one of the largest and most hyped Ethereum-centric exchanges on the planet, has a volume of just over $2 million per day.
Although day traders favor quick transactions in a volatile market, these platforms are not entirely useless. After all, people looking to buy once and “HODL” would not mind waiting a few more seconds for funds to reach their wallets.
Exchanges and bank relationships
Perhaps one of the most challenging day-to-day aspects of running an exchange is managing relationships with banks to ensure a fiat gateway. Speaking at the conference, Zhang revealed that Huobi mostly relies on partnerships with exchang...
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