Dividends or repurchases: conspiracy and conspiracy of the exchanges

Today, there is a gap between the major exchanges such as the fire currency, the currency security, and the OK. The reason is that the company announced that it will no longer buy BNBs from the secondary market, but directly destroy the team’s existing BNBs. Li Lin quickly commented that the program reduced the repurchase cost of the currency security by several hundred million per quarter and hoped to follow suit. The words revealed that the currency was safe to play "small smart".

It is not difficult to see that the platform currency economic model is the core of this debate. As repo is adopted by more and more exchanges, the operation methods are also more and more complicated. Why is the repurchase destruction mode adopted by more exchanges than the currency-sharing model? Is the repo destruction model really the best economic model for the exchange? Where does the core value of platform coins come from? Through a lot of interview research, I hope that this article will lead to more thinking of readers.


01 platform currency status

Since the beginning of this year, the exchange platform currency has generally ushered in a wave of good momentum, which of course has a direct correlation with the trend of the mainstream currency market, which can bring higher transaction volume and related income to the exchange, and then the platform currency. The holders bring more benefits. However, there is another factor that plays an important role, which is the economic model of the exchange platform currency.

As we all know, platform currency is one of the most widely used types of cryptocurrency in landing scenarios, mainly issued by the exchange for the purpose of raising funds or marketing customers. The platform currency economic model is also the value formation mechanism of the platform currency. After the platform currency is issued, the exchange usually gives it certain usage scenarios and rights. The richness and depth of its rights determine the intrinsic value of the platform currency. For example, the repurchase and destruction mechanism of the currency security and the IEO mechanism drove the price of BNB to rise sharply. FCoin's large-scale dividend mechanism promoted the positive trend of FT price.

According to the classification of Huang Qi, the founder of the Bow Capital Partners and the founder of the currency trader, the exchange can be roughly divided into points (BNB, HT, OKB), equity pass (FT, GAEA), creditor's rights or convertible bonds (LEO). The value of the equity pass is determined by the profitability of the exchange's assets and its assets. The value of the claims is the value of discounting all cash flows in the debt repayment process.

Since the beginning of this year, major exchanges have adjusted the platform currency mechanism. Although they are all based on the interests of users, in fact, regardless of the real motives or the actual effects, some exchanges are actually making profits. For the holders of the currency, some exchanges are secretly taking advantage of the opportunity to cut the leeks at the same time, and it is difficult to distinguish between the real and the false.

According to the chain catcher, the adjustment of the platform currency mechanism of the well-known exchanges this year mainly has the following actions: In January, the company launched the IEO activity, and the user needs to use the BNB to purchase the IEO currency share. After that, the exchanges such as Firecoin and OKEx followed suit; At the beginning of March, FCoin optimized and adjusted the original platform currency mechanism, and automatically returned the FT to the mine, and set an upper limit on the daily mining volume. Since then, it has successively launched mechanisms such as mining, mining, mining and mining. The road to the general economy has greatly advanced;

At the beginning of May, OKEx announced that it would suspend the original OKB "Happy Friday" Super Encouragement Campaign. At the same time, 30% of the currency transaction fee will be used to repurchase OKB and be transferred to the Black Hole address for destruction. At the end of June, the MXC Exchange passed The community vote changed the dividend mechanism to the repurchase destruction mode; at the end of June, the fire coin announced that HT would deduct the transaction fee and discount the handling fee according to the number of HT held.

The above are only representative cases of many exchange mechanism adjustments, and there is nothing more than a theme behind various adjustments, namely, expanding the purchase amount of platform coins in the secondary market through IEO, repurchase, etc., thereby forming a deflation mechanism to improve platform coins. value.

Nowadays, the favorable stimulus of the platform for the launch of IEO has been fully verified by the market. The exchange has already used part of the revenue for the secondary market repurchase has become a trend, but this aspect still leads to many discussions in the industry, the exchange will What is the difference between income for dividends or repurchase? Will the repo destruction mode be superior to the dividend model?

02 pros and cons of dividends and repurchase

The currency dividends and repurchase destruction are essentially the way in which the exchange distributes profit income to the holders and encourages investors to purchase platform coins. Almost no exchange platform has adopted one of them. Specifically, there are certain differences and advantages and disadvantages between the two in terms of incentive effect, compliance, and transparency:

First, at the level of incentive effect, dividends are the most familiar incentives in the capital market. Users can get real gold and silver, but dividends actually allocate part of the value of platform coins, although the value of platform coins is theoretical. There will be a decrease, but as the user's expectation of the future value growth of the platform currency increases, it will still have a greater stimulating effect on the price. "And, in the development of cryptocurrency, dividends can better reflect the charm of the general economy," said a senior user of the FCoin community, Lei Di (a pseudonym).

Repurchase destruction is equivalent to giving the value of the funds used in the exchange repurchase to the platform currency in circulation. By reducing the supply of platform coins and forming a deflation model, the value of the platform currency is increased, and the price of the platform currency is formed. Support, and the short-term stimulus effect of the price is particularly obvious;

Second, at the compliance level, since the dividend mechanism is equivalent to giving the platform currency an equity attribute, it is more likely to be recognized as a Security Token by the European and American regulatory authorities and touch the regulatory red line. The repurchase mechanism is more difficult to identify the equity attribute, so the regulatory risk will be lower;

Third, in terms of transparency, since the intensity of dividends and repurchase depends on the level of income and profit of the exchange, the authenticity and accuracy of the data are difficult to judge, but many industry veterans express to the chain catchers. The dividend mechanism still needs to be relatively transparent, and the repurchase destruction has relatively more space for black-box operations.

"Is the platform currency destroyed by the exchange bought from the market or is it in stock?" Meng Yan, vice president of CSDN, questioned, "We can fully imagine such a repurchase destruction operation: first make a small in the market. The small pull operation, pull the price up, and then based on the price of this pull, destroy a part of the inventory, zero-cost token, said that it is a repo destruction, in fact, its own profit is good to put there Not moving at all."

Huang Wei also expressed the same doubt. Since the use and quantity of platform coins have not undergone any credible audit, the exchange can randomly destroy the reserved parts in the chain. Therefore, Huang Wei believes that under the current market conditions, the dividend system can protect the interests of investors to the greatest extent. "The money is actually better to see."

Today, the latest version of the platform currency destruction model announced by the currency security is similar to the above, but the difference is that the currency has publicly announced this adjustment, rather than secretly operating and fooling investors.

Jeffery, the founder of Chaocai Cat, also developed a formula algorithm for the platform price trend in the dividend and destruction mode, as shown in the following figure:


"Because 1/2 is always less than or equal to 1, the price of the destruction route for the platform currency is always less than or equal to the dividend route, that is, the dividend route is more advantageous," concludes Jeffery.

However, from the current status of the exchange, more and more exchanges have begun to switch to the repo destruction mode, which was first implemented in the exchange industry. It is now almost the standard for first- and second-tier exchanges, with only a few transactions such as FCoin. The model of dividends and repurchases is still maintained. It is understood that FCoin has accumulated more than 80,000 BTCs to the holders since the beginning of June. For the reasons behind, in addition to the potential cheating space mentioned above, many exchanges have mentioned compliance requirements, and the repurchase model is an inevitable requirement for the exchange to go international.

Li Xiandong, founder of Biki Exchange, believes that financial leverage is the most important consideration for exchanges, rather than the so-called compliance. "Is the one-million-dollar dividend and the one-million-dollar repurchase effect the same?"

Jeffery further pointed out that most exchanges are not large in terms of income and profit. If the dividend model is adopted, in fact, the value of dividends received by most ordinary holders of credit is very small, and the same scale of funds will be more effective for repurchase. After all, everyone knows that things are rare, and the hotspots will be swarmed up, but I think that as the market reaches a certain volume, the dividend model will re-emerge as the mainstream of the exchange."

In fact, whether it is holding money dividends or repurchasing and destroying, it is actually a category of basic model design, and it is also a specific design by the exchange based on the principle of maximizing its own interests. Under this circumstance, although many exchanges are striving to convey the concept of sharing dividends between users and users, they have also introduced some measures to enrich the use rights and scenarios of platform coins, but they cannot fundamentally safeguard and protect investors' long-term. interest.

What's more, the sharp rise of many second-tier exchange platform coins is now based on the barbaric development of the exchange itself. There are many potential hidden dangers. Once the development model encounters bottlenecks or moves toward the slightest, platform coins may form larger for investors. s damage.

03 The importance of governance mechanisms

Therefore, while focusing on the influence and prospects of the exchange, investors should also pay attention to the top-level design of the exchange model to judge the prospects of its exchange and its platform currency, including core concepts and governance mechanisms. As Meng Yan said, the governance mechanism is a higher-order construction than the economic model, which determines a series of settings for the economic model, trading rules and other exchanges.

However, in terms of first-line exchanges such as fire coins and currency security, although the user community is quite large, its governance mechanism is not open, and it is difficult for ordinary investors to analyze this in depth. But not all exchanges are like this, FCoin is a pretty good observation.

Since its inception, FCoin has been known for its general economic model. However, due to the inherent flaws of its early model, FCoin was born and has been quiet for less than a few months, but since the beginning of the year, FCoin has regained its vitality and returned to second-tier trading. The main reason behind this is the establishment and maturity of its community governance mechanism.


FCoin investors take the initiative to open positions

According to FCoin's Basic Law, which was enacted last August, all FCoin rights belong to all FT holders. Any community user can send proposals and proposals to FCoin. The FCoin Community Committee, which is elected by all holders, is responsible for the discussion of the proposal. Decision-making and execution, any major mechanism formulation or adjustment must also be implemented by a referendum, achieving a combination of scientific and democratic, direct democracy and indirect democracy, and ensuring that all decisions of the platform are in line with the interests of most holders.

It is under this mechanism that FCoin's community-based teamwork has greatly improved and optimized the original mining mechanism, which makes the mining mechanism more healthy and sustainable, attracting a large number of new users to FCoin and participate in the community. build.

"By the innovation of the community governance model, FCoin has formed a meta-incentive model, which allows FCoin to make joint decisions by the community when needed, and to generate new and realistic evidence-based incentives." Road (Note: Meng Yan stated that he has no interest in FCoin). In other words, FCoin has established an extremely flexible decision-making mechanism. Although it may be biased in exploring the path of communityization and certification, it still has enough flexibility and sufficient space to adjust and make decisions. Achieve its expected effects and impact.

Now, FCoin has completed the second reelection of the Social Commission. The new projects such as the FT public chain and the FMex contract platform are progressing smoothly. They fully demonstrate that their community governance mechanism has been on the right track and achieved phase after six months of exploration. success.

Through the FCoin case, we can see the importance of the “top design” of the exchange and the important influence of the concept of sharing, co-governance and co-construction on the development of the exchange.

It is foreseeable that the evolution of the exchange industry is still very long, and major exchanges will still stage fierce competition. The disputes on dividends and repurchase will continue, and more innovative mechanisms will be born, but those The exchanges of fish and fish will eventually decline, and only the exchanges that really value the long-term interests of users will come to the end.