Is it still profitbale as MCDEX is covering high gas fees for orderbook trades?

I did a rough stats on the recent trades of order book and the average gas fee is around $12 per tx, which is way exceeding the trade fee (0.05%) for almost every trade.

Is that really sustainable for such high cost?

You are right. I am glad that finally someone finds the problem and discusses it here!

If the gas price stays at the current level, the gas fee is higher than the trade fee. The founder team is paying the gas fee, which can be considered as subsidies in the early days.

There are some options after we stop the subsidies:

  1. We could set a higher trading fee, especially for the small order. Thus makes the trading fee cover the gas at least.
  2. We could also continue to do the subsidies. The MCDEX foundation could sell some MCB to collect ETH and use the ETH to pay the gas.

However, we will let the community make the decision.

In the future, we will adopt some L2 solution (e.g. Optimistic Rollup), which will reduce the gas cost dramatically. The L2 solution is already on the road map.

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That definitely will save costs. But then MCDEX becomes much less attractive to small traders.

That would be a huge number, like ~3000 USD/day based on the trades in the last 24 hours, and could increase by many times in the future.

I am aware that the foundation will get 25% of total supply of MCB in addtion to the fund raised in mutiple rounds. But considering trade fee is the main if not the only source of income of MCDEX, having such a deficit will hardly sustain.

As ETH 2.0 is still two or three years away, it seems a high-performace L2 solution is the only answer to this challenge.

And here come the future questions, which solution will that be? if Optimistic Rollup is the one where we are at now? PoC? MVP?

We are still studying the options for L2. Personally, Optimistic Rollup is a simple solution.

This could be detrimental for the userbase. DyDx has the opposite formula, where small orders pay no tx fee, and larger orders pay the fees. Possible to asses a fee based on the size of the trade vs. the funding of the margin account? ex: User places $1000 trade with $2000 in margin balance, trades without a fee. User 2 places $1000 trade, with $100,000 in margin balance, gets charged a fee.

This could make it more fair for smaller traders, while still bringing in some fees for the platform. This obviously has some issues as well, ie: larger traders could have seperate wallets to circumvent this.

L2 scaling is certainly needed.

Thanks for the suggestion.
However, I do think DyDx has the opposite formula. Currently, DyDx small order fee is 1% while normal order fee is 0.15%. IMO, set fee rate based on the margin balance is not fair. There is no such kind of rules in DEXs and CEXs neither.

Thanks for the response Jie.
I’m sorry, DyDx fee structure was like that the last time I used it, before I switched to MCDex. Anyway, the fact remains, a $10-$15 fee on a $1000 trade for example is very high. I will be limiting my trades on the platform, until an L2 scaling solution is implemented.

Edit: I saw the fee structure was still 0% for makers on MCD and the increase only applies to taker orders, I did not realize this before and makes it a bit better, although I would propose a “post-only” order type so you do not place a taker order you did not intend to place.

You can see that the minimum order quantity for lowest fee is 4 ETH on margin, and .1BTC for Perpetuals. Compare that to MCDex whose minimum order quantity for lowest fee is $12000.

  • I propose to lower minimum required order size to be more in line with other popular services. This will encourage smaller traders to engage in the platform, leading to increased liquidity, and more exposure for the platform, while still collecting fees from traders.

This is a very new product, in a space which unfamiliar users are unlikely to experiment if it is cost prohibitive. We should do everything possible to make the platform accessible, field is ever changing, and If a user feels they can get a better deal elsewhere, they will.

The table above shows that MCDEX ETH-PERP have a little lower trading fee with their ETH pairs.

Trading Pair Maker Taker(>=$12000) Taker(<$12000) Min Order Size
MCDEX ETH-PERP 0% 0.15% 1% $1000

I would propose a “post-only” order type so you do not place a taker order you did not intend to place.

MCDEX already has a post-only order type on the order book.

Thank you for this, I don’t know how I missed it my apologies. And it seems I’ve missed a few other key points along the way in my previous post. Now that I have read it closer, the current fee structure does seem to be in line with other services. Thanks for the responses, and clarification.

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