The recently introduced “transaction fee collection and return” model is beginning to change the outlook for cryptocurrency exchanges, despite some criticism from community members.
According to CoinMarketCap, two exchanges just topped the 24-hour trading volume rankings after introducing a new “fee collection and return” model for users. Singapore's CoinBene exchange had nearly $2 billion in 24-hour trading volume, and Hong Kong's Bit-Z exchange had a close 24-hour trading volume of $1.5 billion, well ahead of trading leader Binance, which had just $1 billion in trading volume.
The fee-back model was pioneered by FCoin, a new exchange launched in May by the exchange's former chief technology officer, Huobi. and involves exchanges issuing their own cryptocurrency, which they will send to users in the equivalent of a paid transaction fee as an incentive to trade on the platform.
The Bit-Z exchange, according to its technical documentation, initially planned to issue its BZ token, limited to 300 million coins. For each transaction, users had to pay the Bit-Z exchange a commission in bitcoin or ethereum, which the platform fully reimbursed in its tokens. The CoinBene exchange launched the service on June 18, and the Bit-Z exchange on June 25. The sudden surge in trading volume made them the top two global platforms within days of issuing their own tokens.
According to CoinDesk, one of the downsides of this model is that users may start creating fake transactions using automated bots in order to receive tokens issued by exchanges.
Following the increased trading of the FCoin exchange, Chinese news outlets, as well as the Binance exchange, have stated that the model is essentially a initial coin offering (ICO) and that the exchange can manipulate the price of tokens in this way.
Recent news shows that criticism is not stopping other exchanges from borrowing this model. BigONE, an exchange backed by Chinese cryptocurrency investor Li Xiaolai, is also preparing to implement the above-mentioned model.
According to coindesk.com
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