I know that the team strongly believes that decentralized, trustless systems are the way of the future. And I believe that too. If I didn’t, I wouldn’t care as much as I do about this project succeeding either. Being able to trade any Ethereum based asset for another without relying on a third-party is really cool, and just a small glimpse of all the potential that crypto has to offer.
But the reality of the present moment is that being excluded from the biggest CEXs like Binance, Coinbase, Huobi and Kraken is a significant barrier to growth and adoption, and a major reason why this project, which is undoubtedly one of the most important in the entire industry, is so undervalued. Here are some of the major reasons:
- Fees: As I write this, the gas fee for making a single trade on Uniswap is according to MetaMask 0.018233 ETH for a “slow” transaction and 0.041785 ETH for an “average” transaction, which works out to approximately $23 or $53 respectively, plus a 0.30% liquidity provider fee. By contrast, Binance charges a maximum 0.1% fee per trade. This is a significant amount of money for most people. Many people like to buy a small but steady amount of crypto each payday, or enter/exit a position over the course of a week or a month, but on a DEX that would currently be prohibitively expensive. Such high fees also significantly reduce trading volume and liquidity for obvious reasons. These high fees are a major barrier to entry for people like me.
- Fiat/Bitcoin Gateways: The ability to directly transform fiat into PNK, or at least complete the whole exchange on a single platform without additional exchange and gas fees, is a major boon. This process remains significantly easier on a CEX.
- Mantle of Legitimacy: This may seem silly considering the project has already received endorsements from people at the top of their industries like Vitalik and Colin Rule, but a lot of people are simply not even going to bother to investigate a cryptocurrency that isn’t even part of the default list on Uniswap. A listing on a prominent exchange is obviously not a guarantee of legitimacy, but it is at least a first hurdle that weeds out most of the scams and dead projects that crypto is flooded with. I have no numbers, but from informal conversations I estimate people who use listings as a heuristic still make up the vast majority of the crypto community.
- Usability: A prominent CEX almost certainly has a clearer interface with more easily visible stats than Uniswap. On a CEX it is easy to place a market order, a buy/sell limit order, or a stop-loss, to inspect the order book, and to cancel unfilled orders. Orders are executed at a quicker speed and a higher volume. Placing big orders on Uniswap and dealing with terms such as “estimated slippage” is a little scary if you haven’t done your reading.
The sum of all these points is that being listed on a prominent CEX would allow Kleros to grow at a much faster rate. The juror incentive program is a good idea, but being listed could very well bring in many times more new jurors over time. A listing would attract a great deal of new attention, make it easier to on-board curious people, and help existing community members add to their stack without losing half their money in gas.
DEXs are the future. But CEXs are the present. The biggest CEX is Binance, with a daily volume of $17,327,887,421. The biggest DEX is Uniswap, with a daily volume of $793,623,815 —Binance is 21x the size. In addition, there are five other CEXs with more daily volume than Uniswap. The combined daily volume of the top ten DEXs is $31,096,462,228. For the top ten DEXs, daily volume is only $1,933,756,028. The CEX remains most people’s introduction to crypto and their primary buying platform. This is a tremendous slice of the market to ignore.
I have an enormous respect for the team and the project. Kleros is going to transform the way people interact with crypto and help bring smart contracts into the real world. As far as I know, the team has expressed that getting a listing on a major CEX is not a priority, but it is my belief that it would lay the essential groundwork for the growth in users and attention that this project so obviously deserves. I believe even paying for a listing would quickly pay for itself in a higher rate of community growth and engagement. Now is a good time to pursue this, as the project starts to release revolutionary new dapps like Proof of Humanity.
I also appreciate that the team is so open to community feedback, and I hope other community members can either corroborate or put to rest some of my concerns. I have created a straw poll here: https://strawpoll.com/prf389gua to help gauge community sentiment as well.