How is the profit share generated?
Fluid generates profit from its exchange functions. We are unique in that we bridge both the traditional and digital worlds. Our architecture is designed to allow users to hold assets in the “real” world and their digital representations in the digital world, including on-chain.
We charge a fee for exchanging traditional currencies (such as USD) for digital cash (such as DUSD). These exchange fees pay the profit share on our Fluid Accounts.
In the future, we intend to expand beyond traditional currencies to offer digital representations of any physical object, such as stocks, derivatives, wine, art, etc.
How do your exchange functions work?
Fluid provides liquidity to users who want to swap one asset for another, whether it be traditional currencies, digital cash or a mix of both.
How is digital cash used in your exchange operations?
We use digital cash for our liquidity operations related to exchange. We will also use other custodial assets in the future in exchange operations, for example holdings of ETH, TSLA, AAPL, etc. These operations generate fees, which pay the profit share on the Fluid Accounts.
Is it similar to acting as a liquidity provider in the digital world? Or like a market maker in the traditional world?
Yes. Essentially, it is providing liquidity to exchange transactions, but in a way where you don’t need to be an insider (like in traditional finance) or have specialist skills (like in decentralized finance, where you need to use Web3 wallets).
Is the profit share rate guaranteed?
No. It is a target rate, which we expect to achieve over time as we develop our exchange operations. It is possible, although unlikely, that users would receive less than the target rate.
Is this the same as interest?
No. It is the sharing of trading fees generated by real economic activity.
Does the rate vary by currency?
Yes. This is the same as in the traditional world where rates vary by currency (amongst other things). This reflects different operating costs, risk, liquidity, etc.
Do you make more than the profit share rate that you pay on the digital cash deposits?
We expect to make more from our the exchange operations than we pay in profit share on the digital cash, since it is the best crypto on- and off-ramp in the world.
What happens to the excess revenue?
Excess revenue is used for Fluid’s operations and is paid out to Fluid tokenholders.
So, Fluid tokenholders get paid out the exchange revenues generated from the on and off ramp? Kind of like owning a part of Binance or Coinbase?