Launching an exchange is like trying to start a large fire. It takes a lot of work to create a spark & turn that into a self-sustaining flame. The slightest gust of wind or disruption can wipe it out.pic.twitter.com/jSJqWWR7Hn
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I found both these threads interesting & want to chime in w/my thoughts re crypto market data.
To be clear, crypto exchanges will 100% charge for data at some point in the future no matter what @SBF_Alameda says.
Here's why:pic.twitter.com/DBLsLPcjiU
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As oxygen & kindling is added to the fire, it grows & becomes a bit more formidable - a bit harder to quash. If tended to in the right way & propelled at the right times, you'll have an impressive blaze going before long.pic.twitter.com/dKYVfr5QCn
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Traditional legacy exchanges are like large forest fires. Regulation, competition & super expensive data fees try to stifle liquidity, but markets grow & mint money for their owners regardless. It's nearly impossible to quash a forest fire.pic.twitter.com/x8jDQzyQzv
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Crypto exchanges are young and small, like a candle. As SBF says, crypto venues are focused on pumping oxygen into their system, not blocking it with data costs. My guess is we'll see consolidation over time & end up with a few large crypto exchange forest fires, like TradFi.pic.twitter.com/ujnHFi43Z8
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When crypto exchanges become forest fires, YOU BET they will begin charging for market data. They have all the ingredients of a data treasure trove: - HFT clients - fragmentation - market volatility My bet is it'll be WAY more than 5% of revenue.
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SBF also says that because crypto exchanges are more vertically integrated they won't need to charge for data. I personally disagree - vertical integration is MORE of a reason to charge for data. More services inside the exchange means bigger forest fires & more smoke to sell.
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Fintech Frank says customers will be pissed if exchanges charge for data. OF COURSE they would be - just like TradFi customers are pissed at the NYSE for charging so much for data today.pic.twitter.com/E4BKFXTKEo
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I'm glad crypto exchanges offer free market data, and I hope it stays that way. I don't think it will though. Traditional exchanges have been down this path before, and we've seen the ones with the power find ways to charge for anything w/demand. Crypto will likely follow suit.
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