When we founded AAX in early 2018, we set out to connect crypto to global finance. This is still our mission.
But what it looks like to connect those two spheres is not set in stone. While seasoned practices around market integrity, security and performance, developed in traditional markets can be of benefit to the crypto markets, the influence of new entrants in the investment space cannot be underestimated.
Adapting to Gen Z
A recent article in CoinDesk put forward the interesting observation that while crypto markets may be maturing, the way that maturity looks like is partially determined by a new wave of Gen Z investors.
A digital native, critical, establishment-averse generation with a do-it-yourself mentality – in building a platform these are characteristics that need to be considered.
A McKinsey research report, into the adaptations businesses need to make to win the appeal of Gen Z, points out that for this demographic consumption is about access rather than possession. They are pragmatic, favour dialogue, prefer individual expression over labels, and are in search of unfiltered truth.
Crypto & A New Culture of Participation
The resonance with the principles underlying crypto should be apparent. Even institutional standards around trade transparency and liquidity will be of relevance to this population.
But if we look at the evolution of online activities from peer-to-peer exchange, to the sharing economy, and from Facebook groups to TikTok trends, we can see a generation that thrives on hype and the thrill of provocation, lives across different communities, and takes virtual life as serious – if not more serious – than ordinary living.
The growth around decentralized finance (DeFi) solutions, such as yield farming, is no surprise then.
The accessibility, convenience and familiarity of dApps, but also Browser solutions like Brave makes complete sense at a time when the virtual world is one of the last bastions of freedom. It is where young people have a definite edge over the established order to express themselves, search out truth, form identities, and accumulate wealth – whether that’s through content production, trading or participating in a mining pool.
What’s different about crypto, besides the fact that it operates 24//7, is that it directly enables investors to engage the asset and be part of a community of participants and conversation that drives value. This is different from the armchair investment style that characterises the likes of Buffet.
The Turn To Gamification
In the exchange space, and this includes centralized exchanges, we’re anticipating a strong evolutionary shift towards gamification. Following the rise in derivatives and savings products, which will keep maturing, we’re now beginning to see pronounced activity around trading competitions, in the forms of troops, such as at ByBit.
At AAX, in addition to spot, futures, over-the-counter trading, and savings products, we’re launching AAX Grand Stadium, which is a hub for users to earn crypto by performing simple on-boarding tasks.
We are also further expanding AAX Tribe, which is our referral program, to create more opportunities for community building and competition, and we’re also reaching out to our community to take advantage of our API and FIX connectivity – this will be relevant for future competitions as well.
To further make our institutional venue more attractive to the retail space, we’ve invested heavily in our app-environment for optimal user experience. Because while most trades still take place on web platforms, in our community we see a strong preference for mobile trading.
Additionally, we’re offering the lowest trading fees in the industry and provide various opportunities to earn from pro-active participation.
Investing is taking on a different form, beyond trading, lending, borrowing and other conventional activities.
Gamification will eventually give participants in the markets more control over price performance and interest rates, and will create more interesting avenues for portfolio diversification and earning a passive income – with community at the heart of it.
From an institutional perspective this primarily means that DeFi is likely to remain a retail space, while centralized exchanges will continue to serve as a meeting point between a younger generation of investors that will be able to take advantage of their digital disposition to generate value, specifically in the altcoin space, and institutional investors that provide liquidity and engage classical base currencies, such as Bitcoin, Ethereum and USDT – which will continue to serve as important pillars of stability for the industry as a whole.
About the Author
Thor Chan is the Chief Executive Officer at AAX. He was previously licensed in Hong Kong to manage equities and derivatives brokerage and trading operations. He’s held various roles, including Deputy COO at FDT Group, and product management roles at App Annie, Microsoft, Publicis, and HSBC.
AAX is best known for its unique usage of the matching engine that is run by London Stock Exchange. The exchange is well-connected with the institutional space, but caters to retail audiences specifically by offering the lowest trading fees globally. The exchange lists 25+ spot pairs and perpetual contracts major crypto assets, with new listings every month. AAX has also issued its native exchange token, AAB, which raised over $9 million USD in three days. The exchange offers lucrative referral programs, competitive crypto savings products, and with support for 20+ fiat currencies has made it easy to convert cash to crypto, and back.