In the future, when a large number of assets are on the chain, what is the value of brokerages?

Foreword:

Foreword:

Recently, IEO has entered the public view, and IEO projects have become more and more popular. In essence, IEO means that the exchange is outside the List (coin listing) and is responsible for underwriting at the same time. Through IEO, the exchange has actually played a role of connecting the upper (level 1) and connecting the lower (level 2), directly undertaking the two major sectors of the original brokerage business (brokerage, investment banking, asset management, and self-operation).

Further assume that a large number of assets will indeed be on the chain in the future. So, whether it is A-shares, US and Hong Kong stocks, or futures brokers and other traditional market brokers, do they have no value?In order to answer this question, we hope to be able to throw bricks and spark jade, so that friends in the circle at home and abroad (friends in the primary market, such as the asset/coin listing department of the exchange, the wallet/self-media that has risen through proxy investment; the secondary market) Friends, such as the direct sales department/key account department of the exchange, the media/market APP/community friends who want to realize the transaction, and the investment institutions who want to lay out the currency circle) think together:

In the future currency circle, and even after the assets are on-chain, what kind of player structure will the primary and secondary markets of the currency circle be like? What is the cooperative relationship between the players?As long as we understand the essence and combine technological progress to dig out the top-level structure of the primary and secondary markets in the future, we can find a good position for our buttocks.

first level title

In the 10-20-year trend of asset chaining, the first step must be to issue assets, so let’s start with the primary market.

secondary title

The amount of funds raised in the bear market is small, and there are few projects, which can be carried by leading exchanges. Meanwhile, other potential underwriters were not ready.

Before the popularity of IEO in the currency circle, in fact, the last round of bull market was driven by imtoken, ico365, and various individuals and organizations acting as proxy investors. For example, Tokenclub was also a major force back then. In fact, these individuals/organizations have assumed the original role of underwriting in the secondary market. The underwriter completes the operation of selling, and the exchange completes the operation of listing and circulation, and they cooperate well with each other. So what is the core reason for the exchange to assume the role of underwriter in this round of IEO?

Why do exchanges and project parties do this? The basic summary is as follows:

·Exchanges need high-quality projects to bring traffic;

The project party also took a fancy to the exchange's relatively large stock flow, endorsement effect, and experience in market value management;

At the same time, from the perspective of market value management, the fewer participants the better, so it is a better solution to connect directly with the exchange;

Another point that has to be considered is that the traditional ICO model has regulatory risks; the IEO model uses the exchange to deal with the regulatory authorities, and the exchange has the most experience.

But there are two more core reasons:One:The volume of fundraising demand in the entire market is still very small.

The current market environment is a bear market. Although there are always companies that want to raise funds in a bear market, the relative volume must be small, and the project party also knows that it is difficult to raise funds in a bear market, so they will try their best to put them in a bull market. At the same time, after this wave of bear market, there are fewer exchanges. Therefore, fewer projects, less fundraising, and fewer exchanges have promoted:

Top exchanges are willing to sacrifice listing fees, provide PR services, create a hot market, and gain traffic

·The project party is willing to sacrifice a certain valuation and financing amount to gain attention through the exchangeSecond:The comprehensive service capabilities of potential underwriting agencies are not yet ready.

Potential underwriting agencies with traffic, such as wallets, media, market apps, etc., even if the traffic is not bad and the user base is large, they have the following deficiencies:

· Ability to acquire/screen good assets

· Grasp the regulatory scale

secondary title

However, with the increasing demand for fundraising and the maturity of potential underwriting agencies, the market cake will become very large, and the primary market will be stratified, and platforms with traffic can get a share of the cake.If as the market picks up, more companies want to raise funds through currency listing, will the top exchanges that insist on the boutique strategy be satisfied? Here, we still look at the problem through the essence. For example, everyone is familiar with Nasdaq, so if a company is delisted from Nasdaq or does not meet the requirements of Nasdaq, where can it be listed and circulated in the United States? The answer is the OTCBB and the Pink Sheets. People who have watched the movie "The Wolf of Wall Street" will have a certain idea, but in fact the movie is extreme.。

In fact, there are good companies in the pink sheet market. This is the clear stratification of the US capital market.

By analogy to the currency circle, I would like to mention something that you may not have noticed. "The first sister of the currency circle" He Yi said in July 2018 that Binance's centralized exchange will be Tmall, and strictly select good projects; decentralized transactions Knowing how to do Taobao, each project party goes online by itself. If I tell you that the US pink sheet market does not need to publish the financial reports of listed companies, as long as there are market makers willing to provide market making, they can go online. Do you think Binance's decentralized exchange is the pink sheet market?In fact, there is no absolute relationship between centralization and decentralization. Of course, both centralized pink sheet markets and decentralized boutique exchanges can emerge. The point is,

In a good market, there will be a large amount of financing demand, which will lead to insufficient digestion capacity of exchanges that adhere to the boutique route. At this time, a large amount of assets will inevitably overflow to second-tier exchanges, or non-exchange platforms with large traffic.

Of course, the high-quality rate of projects with overall overflow is definitely lower than that of projects underwritten by large exchanges. However, due to various complicated reasons, there must be a large number of good bids being killed and drowned by mistake; otherwise, besides Taobao and Tmall, can there be a little red book, Pinduoduo? Will there still be so many good projects that are not listed on the A-share market, but go overseas? We don't know the reasons for the complexity, but the result is actually quite clear.

·Top exchanges need and must spend a lot of effort to find"assets"

assets

· Good projects are preferred to be issued on large exchanges

The fundraising capacity of large exchanges cannot cover all targets, and a large number of targets will overflow"· Some institutions can"Second floor

To echo the title in one sentence, the traffic side of non-exchanges can completely do the underwriting business in traditional investment banks in the primary market, similar to the model of imtoken selling eos back then.

first level title

Secondary market: The traffic terminal serving retail investors and professional traders, will cooperate with the exchange's globalization strategy to provide personalized services for various customers

After talking about the primary market, let's talk about the secondary market and traffic. In the primary market, the core keyword of exchanges is assets. Then in the secondary market, the keyword of the exchange should be globalization. This year, I have heard many high-level executives of major exchanges mention their globalization strategy. I think the logic behind this has the following two points:

· Access to global liquidity

·Global strategy can enhance the exchange's own resistance to the instability brought about by a single country's policy adjustmentThen, like the primary market,In the future, will players in the secondary market of the currency circle cooperate with exchanges to promote the development of the industry?

? I think the answer is yes. Before explaining the reasons, let's talk about some objective things that happened. In the overseas market, Canada’s Newton platform is positioned as a Broker (broker, or more commonly known as a brokerage), connects with the depth of global exchanges, and helps retail investors obtain the best transaction prices in the world. It has won $15 million from DV Trading, a Canadian proprietary trading company. financing. Another similar American company, Voyager, was founded by the former CTO of Uber and the former head of ETrade, a well-known American brokerage.

If someone retorts that the overseas market will be different from the domestic market, then look at the domestic situation. Bikan announced that it will go online on April 10, and its essence is Broker. In addition, 5 customers whose middle and background solutions are provided by 1Token, a professional brokerage in the currency circle, including well-known media in the domestic currency circle, the futures documentary/monitoring/marketing APP with the largest traffic, and the exchange rate APP with 60 million users, will all use Different Broker forms, "trading function and closed-loop account system" will be launched successively from April to May (before the launch, the name will be kept secret). In addition, more traffic terminals are preparing to launch the online trading function.

Under this momentum, at the end of June, there is a high probability that more than 15 non-exchange traffic terminals in the currency circle will go online for trading; by the third quarter, all traffic terminals will basically have their own account systems and trading functions.

After talking about the phenomenon, let’s talk about the essence, the reason why the traffic terminal needs to launch the transaction & account system:

The traffic terminal needs to be realized, and at the same time, it can better provide customers with one-stop service

At present, we have seen 3-4 business models such as aggregation transaction, multi-exchange transaction, flash exchange model, and CFD model (the latter two are similar). The first two are suitable for platforms that gain a foothold in the currency circle, while the latter two are more suitable for new platforms entering from outside the currency circle. Regardless of the model, there is a lot of demand inside and outside the currency circle, and the essence is Broker (broker). These traffic platforms will bring incremental orders to the exchange, make the cake bigger, further promote more people to enter the currency circle, and promote the on-chain of assets.

secondary title

The backbone of the secondary market is professional traders, who need professional systems and financial services before, during and after transactions

Participants in the secondary market, in addition to many small investors, another main force is professional traders. In overseas markets, Tagomi, which is aimed at professional traders, is favored by investment institutions and has received a large amount of financing of 28 million US dollars.

In fact, in the traditional market, from manual to automatic, from trend strategy to arbitrage strategy, from low frequency to high frequency, from pre-trade investment research to post-trade analysis, from brokerage business to asset management business, there are a lot of IT and financial solutions are integrated in the Broker system to provide services for professional traders, but the currency circle is basically missing.

With the global layout of the exchange, the broker on the traffic side will provide targeted services for different types of customers and guide traffic for the exchange. But behind it, there needs to be a platform that is deeply rooted in the infrastructure of the currency circle to provide one-stop services for technology and financial systems for the traffic-side brokers; in addition, for the backbone professional traders in the secondary market, professional brokers are also needed Provide professional system and financial services before, during and after the transaction, forming a closed loop of the secondary market.

It can be seen from this that in the secondary market, the traffic side of non-exchanges actually undertakes Broker (broker/broker) business with various investment advisory services.

To sum up, in the currency circle and even the entire financial circle, the days when you can earn service fees with just one seat and one license are getting farther and farther away. The key is service:

·If you want to enter the traffic side of the primary market, you need to cooperate with high-quality assets to serve investors

·If you want to enter the traffic side of the secondary market, you need to connect with global liquidity and serve traders