The New York Stock Exchange was established in 1817, setting an expensive and stringent threshold from the beginning: new members must be nominated by existing members and voted on by current members. Not only do they have to pay a membership fee of $25 (equivalent to $3,374 today), but they also need to have one year of experience in buying and selling stocks. Even after paying the expensive membership fee, each transaction requires a commission to be paid to the exchange.
However, it is puzzling that even with such stringent membership requirements and commissions, there are still many traders outside the New York Stock Exchange who wish to join but cannot. Economists have proposed two theoretical reasons for this.
First is the transaction cost. Anyone buying or selling stocks hopes that the stocks in their hands can be quickly sold at the highest possible price or quickly bought at the lowest possible price. To secure a reasonable price for buying or selling stocks, people need to gather information and find suitable trading partners and prices, which often comes at a high cost. These costs include the expense of finding trading partners, transaction costs due to information asymmetry, and sometimes even costs incurred from transaction defaults. Once people realize the issue of transaction costs, those needing to exchange gradually come together, collecting information about the stocks they want to buy and publishing conditions for selling stocks, leading to the establishment of exchanges. Exchanges gather information, reducing individuals' information search costs, and due to the openness of information within the exchange, trading activities can be completed at reasonable prices, thereby creating certain conditions for reducing fraud. It is evident that the emergence of regulated exchanges can significantly reduce transaction costs by providing centralized trading venues and facilities.
Second is liquidity. Once exchanges are formed, they can gather the buying and selling intentions of numerous investors, greatly increasing the success rate of individual investors' transactions. Under the premise of accepting market prices, buyers can purchase the quantities they desire, and sellers can sell the quantities they want. As Bachelier pointed out in the 20th century, 'Differing views on the future value of stocks enable a stock transaction to occur.' The more participants involved in trading, the more likely investors' views on the future will differ, increasing the chances of stock transactions. This characteristic of trading markets is referred to as liquidity, which enables capital to be transferred between different times, regions, and industries, achieving effective allocation of capital resources. It is clear that the formation of exchanges has brought about concentrated liquidity, which is the foundation of the vitality of exchanges and the economic function of the securities market. If the market struggles to complete transactions due to a lack of liquidity, then the market loses its foundation for existence.
The purpose of an exchange is to reduce costs and increase liquidity. However, many on-chain exchanges now face issues such as insufficient liquidity, slow transaction speeds (high time costs), and high fees (high capital costs). Can such on-chain exchanges go far? The answer is clearly no. Insufficient liquidity means that large transactions cannot occur; even a slight buy or sell will greatly spike or crash prices, leading to soaring costs. In fact, transactions may not be possible at all, leaving prices without buyers. Traders who have participated in on-chain transactions this year should have a heart-wrenching experience. Slow transaction speeds (high time costs) and high fees (high capital costs) also lead to skyrocketing transaction costs.
The intentEX launched by dappOS aims to solve the difficulties faced by on-chain exchanges and expand their development limits. What intentEX does may not seem complex; it allows you to place orders not only within this exchange but also delegate orders to other on-chain exchanges through the opbnb chain. Finally, after comparing prices, transactions are completed, ensuring the best price in the shortest time possible. Furthermore, all transactions are recorded on-chain, guaranteeing transparency and security. Thus, with the help of intentEX, you can enjoy the decentralization of on-chain exchanges while also benefiting from the convenience, low cost, and large transactions of centralized exchanges.
After reading various financial books, I deeply realize the impact of technology on finance. The launch of intentEX by dappOS reminds me of the moment in 1981 when computers entered the New York Stock Exchange, before which the exchange was buried in piles of paper. All transactions were recorded on paper, and brokers had to verify the mountain-like records of prices, quantities, and more every day. A large number of transactions were unable to be executed due to discrepancies in verification, with at least $4.1 billion worth of transactions rendered void in December 1968 alone due to unclear records.
If the intentEX spot trading feature launched by dappOS can succeed, it will be the '1981 moment' of on-chain trading. Let's wait and see.@币安广场 @dappOS_com
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