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On top of its novel profit sharing practices, the KuCoin exchange is now the first major exchange to offer comprehensive Bitcoin Cash trading pairs. KuCoin is proving itself as one of the most innovative Crypto exchanges by opening new markets for Bitcoin Cash, while rewarding users for it. The platform is underpinned by the KuCoin Shares token (KCS) which is used in transactions on the site. As of January 17 2018 22.00 UTC+8 all KuCoin traders have access to the following trading pairs, to enable smarter investing: BCH/KCS, BCH/ACT, BCH/XAS, BCH/UTK, BCH/DENT, BCH/DAT.
The new crypto exchange is aiming to make exchanges more community oriented by paying users (that is, holders of their token) dividends from the trading fees levied on transactions. This might seem like a novel dynamic in crypto, but in essence it is taking advantage of one of the most basic principles that has led to success for many technology platforms, economies of scale.
This is the foundation of success for many of the incumbents in the tech industry like eBay or even Google. eBay for example leverage the huge number of sellers and buyers on their site to provide a better user experience for all. Part of the success of Google lies in the way they leverage the mountains of data generated by their users to target ads and also to make their search function more accurate.
As has been seen in the past couple of days with the collapse of some crypto systems that were essentially Ponzi schemes, when used incorrectly the principle of economy of scale is of no value. But there are economic situations in which they benefit all users. Renowned VC Bill Gurley outlined how these economic advantages work:
“Some marketplaces provide enhanced economic advantages. oDesk enables companies to easily provision programming talent from all corners of the globe. This helps purchasers procure a cheaper alternative, while also providing brand-new economic lift to the programmer (supplier). Both sides experience an economic advantage. Another interesting example of this bi-directional advantage is AirBNB. For the property owner, the income is “found money” that simply didn’t exist prior to the marketplace… If you can positively change the economics of an industry, you will find the participants on both sides rooting for your success”
KuCoin want to do the same for exchanges. The economic advantages of an exchange that charges lower fees, has a solid technical foundation, and rewards users for exchanging is good for the entire industry if we work with the principle that cryptocurrencies are providing a useful real-world service (as stores of value, methods of exchange, or in specific applications as is the case with altcoins). Put simply, an exchange that works well and works for its users is good for all involved.
Untapped potential in exchanges
Many of the biggest crypto exchanges have come under fire in recent months for shady withdrawal policies and fees. KuCoin believe that the exchange should work for its users, and such an exchange will benefit from the increased growth of the crypto industry. As they said in their whitepaper:
“Currently, the daily exchange volume of each worldwide top 10 platform has already reached $100 million and maintained the prosperous development. Based on the calculation of 0.1% commission, the daily income of a vibrant platform shall reach $100,000.”
This huge daily income mentioned is something that will, in the future, be used as a reward for the users of the platform. KuCoin want to distribute half of this income back to users: “the majority of the exchange commision will be rewarded to active users who exchange, invest and promote Kucoin.”
In this way, the team want to take on the incumbents with a value proposition that rewards trading behaviour.
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