In order to satisfy its customers’ needs, the cryptocurrency lending service BlockFi has presented a new zero-fee trading model.
Premier cryptocurrency lending service BlockFi has introduced a new feature. It is trading at no fees for Bitcoin, Ethereum and the stablecoin GUSD. The startup has been known to allow users access to returns on their cryptocurrency holdings by offering loans to borrowers against users’ cryptocurrency holdings and then passing across the returns in terms of interest on the loans while securing the crypto assets that were used as security for the loans.
While this model is known to have been extremely successful, the startup has gone one level further by offering to trade of one cryptocurrency asset against another without any need for fees. In this scenario, a user will be able to sell one cryptocurrency asset for another for zero fees. The big question therefore that many have asked is: where will the revenue streams come from? The answer to this will be the data on trades and consumer behavior that will be sold to institutional cryptocurrency firms. These firms will also step into the new market place and will take on the role of market makers which will enhance the liquid position of the new market place. BlockFi Ceo Zac Prince referred to this when he said:
“Market makers want the information about what trades are happening, and they get it by having relationships with as many venues as they can support to receive that order flow,”
This, of course, has brought the issue of privacy of users data which has many people worried. The company itself has sought to allay peoples’ fears when it said that users’ data will be anonymized and that no personalized records will be made available to the cryptocurrency firms.
Sources further indicate that a number of the market makers have been clients of BlockFi on the lending side and some have also been investors in the startup in the early days. They include Akuna Capital, Susquehanna, and CMT Digital.
The CEO’s position is that multiple partnerships for BlockFi allow for the deepening of partnerships with such partners which shows his interest in building the business side of things with such partners for the long term.
The cryptocurrency startup has also indicated that the decision to go into trading was made after a customer survey demonstrated that a large portion of withdrawals was made for trading activities.
This also proves that the startup, that was supported by such prominent names as Galaxy Digital, Winklevoss Capital, ConsenSys Ventures, understands how to respond to the needs of customers.
The cryptocurrency startup has also indicated that it will be adding more cryptocurrency options shortly which include USDC and Litecoin and is also looking towards bringing in new traders in the crypto-space onto its platforms. At the end of the day, it is these kinds of customer-centric innovations that will encourage further cryptocurrency adoption.
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