TraderCobb Speaks to Adam About Our ‘Exchange with a Difference’
Another lunatic with a red jacket on!
Adam was delighted to be asked onto his show to discuss his early career, the motivation behind removing commission fees, how to counter DGTX volatility–and a whole lot more besides. Check it out!
Adam Todd Speaks to TraderCobb in This Unmissable Podcast
In this jam-packed informative podcast with TraderCobb, Adam talks about his trading past as a pit trader and short term scalper. In his words, “another lunatic with a red jacket on.” He explains how commission fees were the bane of his life and often prevented him from making profits. A four-year stint trading in this high pressure, highly aggressive environment was enough for him to seek pastures new.
Adam says that the “last time” he went broke, he decided to leave the pit and head to New Zealand to pick corn and just clear his head for a while. To this, TraderCobb immediately notes that Adam said “the last time.” The two long-time traders dwell on the fact that to become a successful trader you have to learn from your losses–you have to “go broke” a few times before achieving success.
What Gave Adam the Idea for Digitex Futures?
Adam had always dreamed of creating a futures trading environment in which traders didn’t have to pay commissions. He was always dogged by commissions that “ruined the party.” When he discovered Ethereum and the ability to mint and burn your own token, he knew he could achieve his goal.
“It was scratching my own itch,” he says, “I always dreamed of finding a way to trade futures without charging transaction fees on a trade, and the solution was Ethereum.” He talks about how discovering Ethereum “blew his mind” and goes on to say that he feels “very lucky to be in the right place and right time; very lucky to be here at this exact moment while cryptocurrency is just arriving.”
TraderCobb agrees emphatically and goes on to say that for anyone who feels as if they’ve arrived late to the game, they couldn’t be further from the truth. He assures his audience that they’re still relatively early at this stage.
How Does Digitex Futures Remove the Commissions?
The next question that all people naturally want to know is how Adam plans to remove the commissions from Digitex Futures. TraderCobb says that traders pay commissions through brokerage fees and spreads, agreeing with Adam that commissions are more of an issue for low volume, high-frequency traders. So, how is Digitex eliminating spread cost and commissions?
Adam explains that this can be done by creating the exchange and using the native currency DGTX. Since DGTX is the only currency that can be used on the exchange, all account balances, profits and losses will be denominated in DGTX, and its usage is compulsory, there will be a big demand for the DGTX token.
Instead of charging transaction fees, every year we can mint a small number of tokens and sell them to the new traders coming to the exchange. Adam explains that, of course, there is a cost of running an exchange, but we’re transferring the revenue model from transaction fees on trades to an inflationary model where costs are being transferred proportionally to all token holders.
What About DGTX Volatility?
TraderCobb finds this interesting, however, he brings up a couple of potential problems with this model. First of all, what about the volatility of the DGTX token? And secondly, he points out that if our marketing fails and we don’t attract traders to the platform, we will not have a business at all.
Adam argues that this is the same scenario as with a fee-charging exchange. If you have no traders, you have no liquidity, you have no business. He also remarks that we don’t need the token price to continually rise; we only need it to maintain a value–If out of the one billion DGTX token supply, we only need to mint 5 million to cover operation costs, that would be an inflationary effect of just half a percent, something easily absorbed in a token price.
However, he concedes that “price volatility is the main problem that the model does introduce. Price fluctuation is an issue and something that traders will have to accept, but they will be able to peg the value against DGTX.”
TraderCobb agrees that some kinds of pegging mechanism will be very useful for traders to allow them to hedge against DGTX and effectively have a stablecoin. “We’ve figured out the mechanics of the liquidity system,” Adam says, “but it needs a lot of traders to make it work.” Liquidity, he goes on to say, is such a big thing that’s why our marketing is so massive. “We’ve knocked the marketing out of the park, with a waitlist of 1.5 million people.”
Moreover, there will be a lot of liquidity coming in from high-frequency algo traders that can trade for free. Adam says:
“I believe the liquidity will come and liquidity begets liquidity. The pool of money isn’t constantly diminishing because we’re not constantly siphoning money out of the pool like commission charging exchanges.”
When Is the Exchange Going Live?
The next inevitable question was when the exchange is going live, to which you can almost see Adam smiling ruefully. “We’ve had so many people asking that,” he laughs. He then explains that we’ve had a few bumps in the road with development, that it’s been a slow and painful process but that we are finally in the right hands with Ethereum-approved SmartDec.
He speaks candidly about the problem with having such good marketing if development fails:
“When you’re very good at marketing and you’ve got such a big waitlist and your development fails, all you’ve managed to do is tell the maximum amount of people how much you suck.”
He goes on to say that we can’t give any launch dates for now, but it is firmly under control and that we’re aiming to launch something before the end of this year.
“one of the most refreshing things that I’ve heard in many interviews is honesty; falling on your sword and saying, “we’ve made mistakes.” It’s refreshing to hear someone just tell it like it is.”
They go on to discuss the benefits of non-custodial accounts and the scaling solutions that we’re working on currently. Adam says that we will be making this open source and sharing how to make a highly active futures trading environment non-custodial with our cutting-edge technology.
Wrapping it up, TraderCobb says:
“If you don’t get the volume and users and token going and business moving, everything is worth nothing. Fall on your sword and die or stand up and fight and win. You’re doing a very different plan, I really like the way you’ve done it.”
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