Issues with Existing Derivative Exchanges

There are quite a few issues with current exchanges:

Fund Safety:

Even though the cryptocurrency industry has attracted broader attention in the past years, fund safety is still the number one concern for most crypto holders. Digital asset theft has become a common one and it has discouraged investors from investing in digital currencies.

Tsihita (2021) listed the crypto heists in there article Worldwide cryptocurrency heists tracker:

  1. Coincheck – $532 million was stolen in January 2018.

  2. MT Gox – $470 million stolen in February 2014.

  3. KuCoin – $281 million was stolen in September 2020.

  4. BitMart – $196 million was stolen in December 2021. Bitgrail – $150 million was stolen In February 2018.

  5. BitGrail – $150 million was stolen In February 2018.

To date, USD 4 billions has been stolen in crypto history, In today's value, it is worth more than USD 90 billion in today’s value. This is a huge amount of loss for crypto holders, even though in particular cases some of the money was returned.

System Stability

System stability refers to the degree which the system can resist changes to. Both for exchanges and financial institutions, high system stability enables the system to operate after internal or external disturbances. It is the key performance indicator of a system. However, systems of sSome exchanges systems are unstable and easily paralyzed, which in return raises doubts about the security of fund and liquidity of transactions.

Expensive Trading Fees

Cryptocurrency traders pay trading fees when trading on an exchange. The trading fees are based on the types of orders placed. Besides deposit and withdrawal, crypto exchanges also charge fees when doing transactions. Trading fees are usually charged in two ways:

  1. Flat fee: some exchanges charge $0.99 or more for making a trade.

  2. Percentage fee: most of the maker-taker fees, known as payment for order flow, are under this category. Makers are market makers who add liquidity to the market until it is picked up by another trader. Takers are traders whose prices are set by markers.

Maker-taker fees are the major costs of trading, they vary a lot from exchange to exchange. Active traders can save a huge amount of money by selecting a cost-efficient financial institution.

Trading fees comparison of major market players:

ExchangeMakerTaker

Fairdesk

0.02%

0.04%

Binance

0.02%

0.04%

Bybit

0.01%

0.06%

OkEx

0.02%

0.05%

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