A big news, Charles Schwab, the leading online brokerage in the United States, announced that starting from October 7, the transaction fees for financial products such as US stocks and ETFs will be reduced from US$4.95 to 0. The market reaction was quite violent, and the stock price of TD Ameritrade After falling by 25%, after the US brokerages started the price war, the transaction officially entered the era of low handling fees.

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Broker Era of the Exchange

What is the brokerage model (broker service provider) of the exchange?

The brokerage model is to base the trading depth on giants (mainstream exchanges), and focus on their own business of serving users.

PS: Behind the trading depth of brokerages comes from an aggregator. The aggregator collects orders from several major exchanges. When users need to trade, they can enter the brokerage’s page. The actual transactions still occur in several major exchanges. Place

Why did you choose this track?

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There are several types of players in the whole track

1. Build your own transaction aggregation system

- For example, the very well-known 1token in China (official website introduction: 1token aggregates global exchanges, one account, trading global currencies, covering spot and derivatives)

- Bikan (starting from a market information station to establishing an intelligent aggregation trading system)

- Bituniverse (aggregate transaction + grid transaction)

2. Using a third-party transaction aggregation system

For example, Meetone, BitNiuNiu, and Shallot are all based on the original business, and use 1token’s transaction aggregation system in order to expand the transaction business

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summary:

summary:

In the traditional financial world, there are few institutions with exchange licenses. For example, in China, there are only the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The trading needs of ordinary people are met by brokers (PS: after the user places an order, the brokerage goes to a large exchange to trade and complete the user's needs. ); the difference in the blockchain world is that before the regulations are clear, multiple centralized exchanges can exist at the same time, and there are even many decentralized exchanges that do not require trust and permission. Through the aggregated trading model, brokerage exchanges You can hide your strength and bide your time, while attracting traffic and maintaining users through your own unique features, while buying time to build your own transaction depth and grab the big cake in the future market.

The open financial DeFi field is also trending toward aggregation, because Compound, the largest "lending" application, has a good network effect, rich asset deposits (more than 100 million US dollars) and many lending demand parties, making people who want to surpass It has become very difficult for Compound to establish a lending market from scratch, and it is a good way for new entrants to choose to build on an already mature lending market.

Similar examples include Dharma, a star project, which announced not long ago that it would abandon the original architecture. In the future, it will focus on providing users with a smooth user experience, and deeply build the platform's lending and lending counterparties on top of Compound (in other words, Dharma The future is an entrance for lending, and the actual lending behaviors all take place in the Compound protocol)

Of course, there are also platforms that have not given up on competing with Compound, such as

1. dydx (fund accumulation of 25 million US dollars)

2. Fulctum (fund accumulation is about 2 million US dollars)

But these decentralized lending agreements still have a big gap with Compound’s $100 million

The strong network effect allows new entrants to adopt an aggregation strategy similar to the exchange ecology and build their business on the shoulders of giants. This trend of building on the shoulders of giants will be particularly evident in open financial DeFi. Unlike centralized services that require authorization or even payment for each access, open finance is an agreement that does not require any permission, just like layers of Lego blocks Similarly, after the team is familiar with the code, the third-party team can integrate the underlying protocol quickly and at low cost, and launch more distinctive services on the upper layer)

As a result, a platform that maximizes user deposit interest rates through intelligent optimization was born in the field of DeFi lending market

What is Smart Optimized Rate?

for example:

for example:

When the deposit rate of DAI on dydx is 10% higher than 9% on Compound, the platform will automatically detect the attractive interest rate on dydx and transfer part of the user’s assets on Compound to dydx to maximize profits (PS: There is only a part here, because once a large amount of DAI is transferred, the rate of return on dydx will also drop)

Who are these smart optimization providers?

1. RAY（Robo-Advisor for yield）by Staked.us

2. Idle 

3. MetaMoneyMarket

4. Topo Finance

Maybe you have already started to question, can such a model make money?

Because of such a platform that optimizes the lending rate, the actual lending situation occurs in a third-party agreement (for example, if a user deposits into Compound through an optimized interest rate platform, the cost of the loan will also belong to the third-party Compound, so such an intelligently optimized platform/protocol What are the possible profit models?

1. Collect part of the interest generated by the user (the above options are not chosen, because this violates the principle of earning the highest profit for the user)

2. Charge the creation service fee OriginationFee (Dharma once mentioned on Twitter that this is a good model, charging a small fee by providing good and convenient services)

3. The wool comes from pigs (after these platforms have traffic, they can make money in other ways. For example, Dharma mentioned that there will be fiat currency deposit and withdrawal services in the future, and Idle also mentioned that future income through fiat currency channels, contract insurance service fees, DEX Token exchange income, etc.)

4. Collect part of the user’s excess income (for example: user A can get at least 5% interest income by default, and the platform helps users obtain 7% interest, then a small part of the user’s excess 2% interest will be charged)

The aggregated DeFi platform is a representative of providing multiple services to obtain new traffic, and access to new assets is also a very good selling point

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The following are two ideas for lending platforms in DeFi

1. Do things that others dare not do and do not want

The platform accesses USDT, an asset that is hated in the DeFi circle. Although everyone doubts that USDT may have a system risk at any time, in the centralized lending market, the amount of USDT is huge. Currently, the decentralized exchange DDEX has launched USDT lending services (let us wait and see)

2. Access to potential assets and grow with the demand for potential asset loans

For example, emerging index-based stablecoins like USDx, or platform stablecoins (HUSD, USDK, BUSD) endorsed by major exchanges, timely access to these stablecoins and cooperate with them, may enjoy the explosive growth of stablecoin lending demand Bonus (for the platform, it is the loan amount)

Going back to the aggregation model, traditional businesses can expand into more areas after satisfying users’ needs and gaining traffic. In the reckless period, standing on the shoulders of giants, every emerging team has infinite possibilities.