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Subscription models have taken over the world but not in crypto, is 2022 the year crypto catches up?
Exchanges have charged their customers a percentage of every trade for as long as Bitcoin has been around. But, a new trend may be emerging; trading with a monthly subscription and no other fees.
Going to the cinema feels nostalgic today; instead, most of us “Netflix and chill” or tune into Prime Video for the latest movies on demand. With Netflix, you pay monthly to watch as much as you like, and it´s not just movies. Today we do a lot with subscriptions, ranging from shopping (Amazon or your local veg box scheme) to music (Spotify). You can find almost anything you want on a subscription, but it seems crypto exchanges are behind the times, still charging customers every trade they make. Though perhaps not for much longer.
This article looks at how two exchanges (a household name and a new start-up) might disrupt the traditional pay-per-trade approach with their respective subscription models. Plus, we discuss what this could mean for the enthusiastic crypto traders amongst you and the future of exchanges.
Coinbase is not renowned as an innovator in crypto none the less they are one of the largest companies and probably know a thing or two about what works.
Currently testing out a subscription-based model (in Beta for a limited number of users), Coinbase One is a new model where users pay $30 a month (according to what we have heard) for “$0 trading fees”, account protection and priority support.
According to their site, they still include a spread when you buy and sell, so it appears as though Coinbase One applies to the Coinbase platform only. There is no mention of their subscription model on Coinbase Pro, where most trading occurs.
It is indeed an enticing proposition. However, whether the general user base will be offered such membership or Coinbase will drop the idea entirely is yet to be seen.
Eve Exchange is a relatively unknown project focusing on subscription-based trading, launching its platform in May/June.
With marketing that states a subscription will cost $19.99 per month, Eve plan to offer “Unlimited trading without commission”, and it appears to extend beyond just buy/sell into trading.
It’s a bold move from a new project, but something must be there if Coinbase is testing it.
What´s So Great about Subscriptions?
In the non-crypto world, people are attracted to subscriptions for three core reasons: 1) how much one can save, 2) how much more one can gain, and 3) convenience. And in crypto land, it will likely be the same, but there are indirect benefits too.
The success of Binance has been largely driven by the relatively low fees (and support for many coins). And Binance has since grown to be the most active exchange by a considerable margin; at the time of writing, its total trading volume equates to more than all the other top 10 exchanges combined.
So, it is probably safe to say that lower fees equal more trading (higher volume), which is great for everyone and the crypto market in general.
In summary, the main benefits of a subscription-based trading model include:
- Saving on fees
- Knowing what you are paying each month
- Any other services offered as part of the subscription package
Who wouldn´t like to pay fewer fees?
Trading Fees Make Exchanges Uber-rich
Crypto is money for the people, right? While that is true in many senses, it has also made the current exchange model an incredibly lucrative one.
Pay-per-trade makes exchanges uber-rich because they make a percentage of every trade you, your brother, mother, aunt and friend do. However, the subscription model is fascinating because you pay to trade instead of per trade.
So, will we see a new trend begin as Coinbase and start-ups like Eve run trials and launch new platforms with a different approach to fee taking? It would certainly be hard to compete with a $19.99 monthly payment and zero additional fees.
We will watch with keen interest to see if the subscription approach catches on.
Have you heard of other subscription-based exchange offerings? If you have, please write to us because although we couldn´t find more than mentioned above, we believe it’s coming!