How sustainable is an economy powered by Arbitrage trading?

in LeoFinancelast year


The principal aspect of a tokenized cryptocurrency ecosystem is powered by the profits generated by its traditional token as its value increases. Precautionary measures by custodians of such systems include building reserves by selling their tokens and saving in more stable assets. Extreme market conditions usually challenge their structures. A good number of them fall to this challenge. The rampant bankruptcy and project failures reported during the crypto winter are proof of these usual shortfalls.

Ecosystems that aren’t tokenized, are sustained by other strategies. For projects (like exchanges) that offer services, their sustainability is a function of the profits generated from the services they render. For exchanges, their revenue sources include withdrawal and trading fees. Systems like this falter when the demand for their services goes down. This might be due to the firm falling out of favor with the cryptocurrency community or extreme market conditions like crypto winter.

For MOSDEX, there is a major difference. The MOSDEX arbitrage trading protocol powers the ecosystem. Revenue from successful trades is used to reward stakers and sustain technological developments. This system is not tokenized and is not a routine service provider like exchanges. In other words, no user pays a fee to stake the protocol.

The MOSDEX swap charges a fee for swaps, but this is not a major part of the project’s finance.

Questions arise, how sustainable is a financial system powered by an arbitrage trading protocol? An even more interesting question is how stable this economy is and how it will be able to hold on better than these other systems mentioned earlier.

MOSDEX has run this system and the crux of this system works in an obvious pattern; the arbitrage protocol trades arbitrages between pairs and exchanges and returns a profit which is divided between stakers and the project management. The same goes for the next trade run and continues for as long as the protocol and financial system exist in the same space.

Arbitrages are as old as trading platforms that run orderbook systems, even before these platforms, price differences for a single commodity across different locations have always been a thing. Arbitrage in this same vein will always exist in the trading system. Regardless of the general condition across the market, the arbitrage protocol will be able to conduct trades between pairs to exploit the orderbook’s spread or reluctance to attain a uniform price.

This hints at the sustainability of the economy run by the MOSDEX arbitrage trading project. How sustainable this system is, will depend on the ability of the arbitrage protocol to run consistently without breaking down or its algorithm being overrun in such a way that it doesn’t generate profits anymore. Another breaking point is a case where the MOSDEX Profit Sharing Model (PSM) is not practiced in totality.

The Profit Sharing Model controls the management of funds for the MOSDEX ecosystem to properly accommodate the stakers who fuel the economy and the team in charge of putting the protocol and other parts of the project to work. The PSM revenue system also includes the fees generated from the swap and any other part of the ecosystem that generates tangible revenue. But the trading protocol is the main figure in all of this.

What could go wrong? We have gone over possible breakdown points of this system; the resolution is the viability of the project revolves around management and not some uncontrollable events. However, on the upside, systems like this promise long-lasting viability as the main sustainer is a market scenario that persists through the most extreme conditions.

Regarding stability, the two main tokens for use on the platform are bitcoin and USDT. Both assets are arguably the most stable assets in the crypto space. They also enjoy the highest liquidity. Through the worst market conditions, these two assets will maintain a relatively stable value.

But the protocol trades almost every asset listed on the integrated exchanges. While this might sound like a contributor to a shaky system, it probably isn’t. A widespread support system means that the arbitrage protocol will always keep trading between pairs and have an array of options to adjust to just in case the market condition clamps down on the profitability of other pairs.

In conclusion, MOSDEX’s economy is powered by a sustainable system. This assertion is based on published data about the protocol and how it runs the ecosystem. This judgment is made based on the frankness of these pieces of information.

Get a MOSDEX account today and start earning from arbitrages. A 30 USDT bonus is awarded to new registrants.

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