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Non-custodial crypto exchange Shapeshift has now announced that trading in its platform will be commission-free. In a press release published by the company on Wednesday, Nov. 20, the exchange’s decision is geared towards attracting more customers into its fold and push forward a borderless, decentralized financial system.
ShapeShift founder and CEO Erik Voorhees said that by eliminating commission fees, it will remove two of the biggest issues faced by non-custodial exchanges: illiquidity and steep service cost. The move is expected to lure crypto traders from custodial exchanges to non-custodial platforms, an endeavor that Voorhees has been working on for nearly a decade.
“We believe that tokenized assets create powerful new mechanisms for customer engagement. ShapeShift's FOX token, which perpetually grants zero-commission crypto trading to those who hold it, is our initial demonstration of this thesis,” Voorhees said.
How does it work?
The new model is quite simple. All participants in Shapeshift will be receiving 100 FOX tokens – the company’s loyalty tokens – which represents $10 worth of free trading apiece. If users hold on to the token, they’ll enjoy commission-free trading.
If not, they’ll have to pay the retail rate of Shapeshift. Every 30 days, the token’s $10 free trading representation refreshes, which will be perpetual so long as participants hodl. Obviously, the number of free trading users can do depends on the number of FOX tokens they’re currently in possession of.
Shapeshift will still make money
Shapeshift believes that even with its commission fees gone, the platform will still churn out profits. After all, people might choose not to hold on to their tokens. And there’s also the fact that Shapeshift will be selling its FOX tokens in exchange for commission-free trading if this initiative succeeds.
Shapeshift’s business model differs from custodial exchanges like Coinbase and Binance since it doesn’t store a user’s key, funds, and personal information. Instead, participants will be keeping their funds and data inside a hardware wallet. With this new model, the exchange expects a 30% surge in trading accounts.
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