So, I talk about this everywhere and to everyone who will listen, but I will copy some relevant details here as it often gets murky in the repeating. Legal is a huge part of CEX exchange listing and it's a very different regulatory landscape from when Bitcoin was getting listed everywhere.... Arguably without Bitcoin there would be no CEXs period, but in most cases it really comes down to a combination of things that make us a difficult add, especially these days where EVM chains are almost instant no dev-overhead business endeavours, we are a coat/benefit/time deficit and so our listings often take longer. At current we're currently in the legal/due diligence stages with five large CEXs, and realistically, overall more volume will continue to make it easier to help out way some of the more difficult aspects such as no legal entity. I worked for about 7 months with Binance US to negotiate and do all the legal for a listing... And then.... Well! There's that regulatory landscape again.
Here's a long snip of some of the discussion that often comes up each time people sort of say 'well, we've given up on listings and the big whales want us not to get listed.' That really couldn't be much further from the truth but it helps to get more understanding of the sort of multifaceted challenge that we present in our current for to the biggest CEXs we're not currently listed with:
Market Making when combined with legal liability risks and development overhead
This is the thing making our lives a living hell, at current. We wonder how low cap alts and shitty PnDs rocket past us, or why our organic volumes aren't where we want them to be. In a perfect world, this type of service wouldn't be the basis for every coin's volume, but that's not the world we live in.
This is coming up right now because once again, after months of talks with a huge wallet integration- we got stonewalled again. I can talk my way into every meeting. I can get people excited about us. I can often find tricky ways to get around some of the worst legal issues and can almost always negotiate out of listing fees.
But more and more frequently, as new projects rise, and foundations splash out heavy cash to kickstart the baseline for other chain's marketcaps, I'm being told that the line where we will NOT be listed or integrated is based on our volume, and specifically, that we do not run or do not use a market maker.
I have two exchanges at current in limbo because they're waiting on some legal stuff which is in the process of being handled, but they've been very clear that they simply will not list if we do not have some form of MM.
Many CEXs have their own you can pay into, which is basically extortion, but there are many other outside options from buy in to lending based. I don't have a strong opinion on what we do. But I'm being very open and clear right now that this is actively a very real and very problematic stumbling block. And whether we like it or not, this is how coins that don't get seen move themselves up. It's a race to the bottom to get to the top. I well understand this doesn't fit with our ethos.
With all that being said, at some point we have to realize that we have to operate to the best of our abilities to really make a better web3, and play along with the others just enough to make sure we aren't left behind. This is becoming enough of a common theme (me being told "thanks, but hive is no longer/not on our roadmap" directly) that it's a good time for all of us to evaluate at what point we want to stick to this choice or if we want to try to use some of these tools to give ourselves a leg up and get people's eyes on us again. Price action and volume are big ways to do that, and when it comes to businesses who need to make a profit, we either have to pay them directly or show them we have the ability to drive fee generation, or they will keep showing us the door.
I'm actually always super proud when I can say that overall, pretty much all of our volume is driven by the general markets and they're all well aware that this is actually really abnormal in our space, which goes to show just how much sticking power we have- but especially these days, wallet integrations, website integrations, and exchange listings need to look out for themselves as much as I have to fight for Hive's needs- and they're getting very comfortable telling me, "you know what? thanks, but no thanks."
There's a constant stream of complaints that we don't get enough of the 'right' exchange listings, but the biggest difficulty apart from the legal stuff is our volume. So, we either have to work together to provide infra to start targeting DEXes, or we have to become a bit more flexible in what behaviour we want to be willing to put up with to give ourselves a shot in the arm on the charts to help us bring notice to the rest of what's happening here.
As mentioned, even though our setup is small, easy and costs little, these wallets and exchanges won't consider even looking twice at us if they see there's no money to be made at all... so take the cost and dev deficit of adding a new protocol over a one click copy and paste style deployment of an EVM meme coin who'll pay to MM, they'll take the short run of crazy high fee profit over us, ever single time. And that's how you get chains like Tron being lauded as 'the next hot thing' for tokenization and getting added to literally every interface, exchange, wallet, and web3 service going while legitimate, battle tested longevity tech gets left out on the cold.
I think we'd be remiss to stand out here shivering forever knowing that every cycle that we slowly slip backwards and stagnate in terms of attention is something that we could potentially choose a few places to 'go along to get along' and really change, as volume and green trends tend to take on a life of thier own pretty quickly in our space.
It's less about what I want and more about making sure that a lot of our biggest accounts who have strong opinions on guiding the overall ethos and sentiment of the chain are informed about what's happening... Which is basically that some of the big players we have been chasing are getting really comfortable saying 'no, not viable for our roadmap' to us where they used to say 'soon :tm:'
Any time we get far enough to get expectation number and pre-integration approval, it comes with an NDA, which is standard from any of the bigger exchanges. For example, Bitfinex's head of listings has told me directly in a call, with a few witnesses that while they love the idea of us, there will be no movement forward on listing until an MM is secured and provided to them for review (or they will recommend us an 'investor level' one,) because we do not meet the volume and needs of the bulk of their clientele.
We don't currently have any potential listings who have not agreed to waive their listing fee, so just to clarify these are MM services, which usually amount to locking up X amount of token with them, or with another outfit, as secured and guaranteed liquidity.
Depending on the type of MM/liquidity provider, how they make their money differs - either they skim off the top of every trade after you give them lots and lots of coins to work with so there are lots and lots of trades to skim off of, they take a large amount for themselves period as upfront payment and then just trade with what's left with a rough guarantee to hit certain targets, or in the case of an exchange depending on the player-- the trust aspect is much 'better' but of course you're handing them a pile of your own reserves to literally trade profitably against you with.
In the case of ANY MM option, it would need to likely be funded by a proposal, so the numbers would obviously never go without some form of community approval. However, right now, the vast majority of people in here are dead set against ever playing this game at all, which it's becoming time to broach the wider discussion. I can absolutely chase this down with aggression if we want to start collecting options and being more informed.
Basically, we just have to get over the mindset hurdle of 'do we want to play into this aspect of the industry?' because that's our first step. It is gross, and we don't always want to spend, but the flip side is why would people buy Hive directly on an exchange with poor liquidity when they can buy or sell literally anything else with more flexibility and then swap in only when needed, etc? The answer currently is, they just won't, and don't. So a new exchange, or especially multi-chain wallet integrations, look at relatively no one buying and go, 'why should I care?' It's a question we have to mull over a bit as part of our cycle planning, basically.
Kraken we've even had community members who work there (in non-listing positions) do internal presentations and we can't get a listing consideration. Volume, and our legal and corporate structure are the biggest blockers for them. I usually do the diligence paperwork about three times a year. I have negotiated and am in the process of acquiring finalized, fairly low pricedHive specific legal opinions from two acceptable countries (we were listed with Steem documents, and I use Steemit inc's legal opinions in all new listings. Embarrassing, but also not ideal for US compliant exchanges) which I hope will really help on that front.
Coinbase is much the same- exchanges that operate in the US are under HELLA scrutiny, so they are much, much, MUCH more unforgiving of listing applications that do not have doxxed team, corporate address and legally culpable representatives/structures, which of course is one of the absolute hardest things for us. It's not a straight up impossible thing, nor is it solely money or solely legal... it's the awful triple threat kiss of death that we are low volume so taking a risk on us isn't a windfall of profit, we're almost completely anon and no one can be pointed to on paper as the person to sue if we do something shitty so they can pass along any legal accountability, and that we are an entirely different protocol that requires the memo-database setup that means that they have to actually do work that we don't pay listing fees to cover to properly integrate us instead of just using their existing EVM code to add every single new token that gets pooped out.
I'm bound and determined to get them, which is why I keep starting these convos and I'm trying to get around some of these blockers (like the legal opinions), it's just one ridiculously long slog that needs something to give to help up our attractiveness. Volume is some of the lowest hanging fruit.
Thanks for the detailed and excellent comment on this topic!
I was aware of the situation with market making in general and also how dubious many of the practices are on centralised exchanges, but it's clear that Hive is competing in a marketplace within exchanges and needs to 'do different' somehow.
If there is a straightforward and logical solution here, it seems to be to increase the userbase of Hive and to increase demand and trading volume for the token. It would be helpful to know the kind of range of volume that you might have been told is a rough threshold for listing on some of the more busy/desirable exchanges.
It is initially sad to think that a powerfully decentralised project doesn't get enough love in the 'decentralised' marketplace because it is too decentralised and has a bit too much intention to stick to ethical ideas! However, I can also see how this could be carefully turned around in marketing messaging to help people see Hive as one of the few crypto projects sticking to the kind of principles that created Bitcoin.
It's already clear that a lack of public trust is a huge issue with crypto project promotion, so finding ways to educate the world on some deeper truths about the industry could achieve two goals in one - both building trust in Hive and also differentiating it from the competition. Clearly that would need to be done in ways that don't annoy the exchanges too, if possible!
I also wonder if there is a way to excite exchanges to use Hive as a platform to grow their own communities - it seems like a 'no brainer' on the surface, but as you pointed out - they seem to focus exclusively on trade income and not so much on human potential/needs. They could certainly gain some positive PR if they were to be seen to participate in projects that support real communities, instead of effectively operating along the same lines as the banks that crypto was intended to replace.
It would also be good to know some of the costings and general details of the market making options being suggested. All the available options for growth should ideally be considered by the community, even if we eventually agree that these particular ones aren't appropriate.
We will absolutely cover this topic as best we can when gathering data for this proposal, should it be funded. Sometimes just having greater clarity on a topic like this can inspire change to come in unexpected ways!
There's a lot that we could go back and forth on here, but overall I agree- every single exchange that we work with, we attempt to get posting here on chain. Most don't have the time or effort to put into that type of marketing overhead, as again, perceived value of community building here based on volume is a big one vs other places they could be using. I have explained at length how they can use our incentive structure to create passionate brand ambassadors with basically no expenditure, but it hasn't been enough of a draw as of yet. I have one or two we're working with to at very least make introductions on chain.
To be very honest, Binance sort of swept everyone on this by releasing Binance square- we had a few meetings trying to convince them to use Hive as the basis for that system since we literally already have it built, but unfortunately too much lay outside of their control and it did not tie back to their own tokens. We are actually working with them now to try to figure out if they will graciously allow us to connect RSS feeds from our content here to their platform there, lol, so we shall keep at it.
As for MM/Liquidity- any amount at all would have to be paid by DAO, and therefore would have to be public. This certainly does raise some issues, as almost every company and platform providing numbers will NOT allow you to share the costs (similar to most listing deals) and will put a rep under NDA. It also means that they structure their documents and pitches to us a little differently, but I've been approaching all our exchange partners recently to see if I can at least collect some broad info on expectations and what could be provided on platform, to give us an idea if we want to look to intermediary options for the future or bother to do it at all.
Ah, I hadn't heard of Binance square - I just tried to look at it but was told it's not active in my region. I'll try to bypass that somehow. It sounds like the usual story of large corporations wanting to control every aspect of their process in-house as much as possible.
I see the problem with market making, yes. It's katch 22 in that the community can't vote on a proposal to support market making without public access to the terms, which they service providers aren't willing to facilitate.
The De-Fi liquidity pool approach could be a viable alternative. It's not an area I am an expert in, but perhaps @vaultec's plans will offset the problems with centralised exchanges?
The immediate goal is to bring wrapped Bitcoin onto Hive & startup liquidity pools pairing HIVE:BTC HBD:BTC for starters. From there we can pretty easily add LTC, DOGE where a good % of the money is add. From there assuming our development is funded, we can continue to build and start looking and integrating all similar EVM chains for wrapping. Wrapped bitcoin alone will be invaluable to have and would give us a significant source of liquidity. Longer term the more pairs that are added the more options become available and cross trading between pairs at low fees
That's my vision, it certainly isn't easy, but we can moving towards it and it'll become available this year.
Thanks for explaining. So would this setup be accepted for listing on some of the more well known liquidity / DeFi / trading sites? Or is there a reason why it would have to be limited to running on your/our own custom built sites?
The classic apothegm stating the problem: ¿Which came first, the chicken or the egg?
How to increase the userbase of Hive and to increase demand and trading volume for the token if we do not have enough exchanges (CEX) available in the market to purchase Hive with fiat money or trade other crypto tokens for Hive or HBD?
C'mon bro! Has no one told you yet that crypto exchanges are just businesses? Businesses like any other? Businesses that only deal with money as their only tangible and essential product and from which they profit just as traditional banks do?
What freaking interest they might have neither in growing communities nor people nor in human potential/needs? They don't care about anything of that bro. The only thing they are interested in is making monetary profits and growing further to get even more money and profits! Again, just like traditional banks.
Hi, thanks for your comments. Businesses often engage in community outreach and also community building for various PR aligned reasons. The exchange industry is very competitive and any organisation claiming to value decentralisation needs to reflect that claimed ideal over the long term. I appreciate that few may be interested in much outside of their balance sheets, but that is unfortunate and with enough grass roots momentum they may eventually find their lack of connection to their audience is their undoing!
Oh yeah, that's true. But the main "PR aligned reason" usually is because their local or external governments in some way or another force them to cover their part of "social responsibility" with the community.
That's true also. There is too much competition in this industry, simply because it is too easy to obtain exaggerated and large monetary and financial profits from this activity without producing absolutely anything tangible and of value and living only from speculation and people's expectations. I hate to say this, but again, just as the traditional banks.
Yeah, let's continue to be naive and optimistic. And let's hope that one day some rebel with many contacts, relationships and opulence will emerge in this industry and who is truly willing to overturn this current paradigm of the financial industry.
One of the long term vision of decentralisation is to balance the playing field between individuals and larger entities, more than can otherwise be achieved. As time passes and as software improves, it becomes more and more feasible to create systems with blockchains that challenge larger organisations. It's not impossible that they may gradually find they go the way of mainstream TV shows that once dominated public perception, but which today are often outperformed by social media video profiles online.
We have perhaps got quite a journey to complete before that happens - but as times become tougher, people will gradually be forced to live smarter and to be more self reliant. While this is in some senses the opposite of what large financial corporations often want, they may need to respond to it anyway.
I am old enough to remember life before crypto - it might not seem like a huge paradigm shift has been building since then, but in many ways it is.
As already said before, let's hope that one day some heretical rebel with many contacts, relationships, opulence and popular support will emerge in this industry and who is truly willing to overturn the current paradigm that the financial industry is showing today.
Yeah, in many ways it is. But there are some of us who are already way too old, that I'm afraid we will no longer be present to celebrate the crystallization of that huge paradigm shift. };)
Well, there are many possible avenues for significant change of that kind - in fact it seems more likely to me that we will see this emerge in some of the 'poorer' parts of the world as a result of their need to survive/thrive and the limited array of other options available to them due to the biases of the existing mainstream economic systems.
I don't know exactly how long you plan on sticking around on Earth, but I will remind you that change is the only constant :)