TLDR; Nash’s value proposition is based around their matching engine which enables non-custodial trading. That value increases with volume, increased volume will likely come from retail traders first, followed by institutional traders and boosted in the future by Nash Pay.
Nash’s key product is the matching engine, the entire platform’s value proposition depends on the speed, availability and throughput capacity of the matching engine both in technical terms and in terms of market-depth/liquidity.
Hopefully Nash has already internally mapped out potential cohorts for the platform who will drive volume.
As a guess I’d say they are;
Retail casual user - minimal volume possibly boosted in the future by Nash Pay
Retail trader - moderate volume increasing during larger price swings
Retail Algo Trader - significant source of volume especially between larger market cycles and key to early growth
Passive institution - moderate volume, as they require custody solutions more so than trading
Active/Algo Institution - largest source of future volume
Bitgo, Ancorage, Coinbase Custody and Fidelity already provide solutions for passive institutions and it’s unlikely Nash will disrupt this segment of the market which leaves the Active and Algo focused institutions as potential future users. However without regular retail users already providing significant trading volume to trade against there’s little incentive for the bigger players to spend the time/money integrating with Nash. I look forward to see what Nash’s strategy is to increase Retail volume moving forward so that institutions may be incentivized to integrate with Nash. Nash raised $20 million 18 months ago and so far the 32,000 addresses who’ve purchased NEX tokens have contributed < $10 million in all time volume. What’s strange about this is NEX holders have the greatest incentive to drive volume on the exchange second only to the team themselves, evidently NEX holders behave much more like investors than traders.
One method which may be helpful to bring some more volume to the exchange would be to start on-boarding projects that have strong communities which aren’t currently well supported on other exchanges. Some of these have already been suggested elsewhere; pegnet, DigiByte & Elastos
Nash Pay is touted by some members of the community as one of the future key drivers of volume. While there’s some truth to this theory until there’s wider adoption of crypto in general
Nash Pay won’t be able to meaningfully compete with the closest existing analogues PayPal and Stripe. Most of PayPal’s success can be attributed to it’s first mover advantage while Stripe’s advantage comes from it’s extremely developer friendly API’s and Documentation allowing for seamless integration, something I hope Nash will be able to emulate moving forward.
Business Insider Intelligence predicts that global e-commerce volume will increase from $3.1 trillion in 2018 to an expected $5.8 trillion in 2024 when Bitcoin approaches it’s next halving.
Analysts estimate Stripe revenue was about $1.5 billion in 2017 charging 2.9% plus $0.30 fee per transaction
Let’s assume Stripe doubled their revenue in 2018 to $3 billion that would make their total throughput ~$100 billion annual ~$8.5 billion monthly ~$290 million daily
Putting Stripe somewhere in the region of Coinbase Pro by capturing ~3% of global e-commerce volume.
PayPal had $15.45 billion revenue in 2018 charging 2.9% plus $0.30 fee with a total annual throughput of $578 billion total payment volume ~$48 billion monthly ~$1.6 billion daily about 1/3 of Binance by capturing ~19% of global e-commerce volume.
There are a few notable challenges to Nash Pay,
- Merchant Adoption; What’s the incentive for a merchant to go through the effort to add Nash Pay to their platform?
- User Adoption; When it comes time to check out and the user can select between credit/debit-card (Stripe), PayPal and Nash Pay what’s the incentive for them to spend crypto through Nash Pay vs the other options?
- Will using Nash Pay to purchase require conversion through the matching engine if both the merchant and user select the same currency/asset as their preferred medium of exchange?
- Crypto is still in the early adopter phase and therefore the percentage of participants in the ~$3.5 trillion e-commerce space who use crypto is still extremely low and therefore Nash Pay’s total addressable/serviceable percentage of that market is significantly lower than PayPal and Stripe.
This post is just a bit more thinking out loud from me as Bitcoin support and GA approaches, I’m sceptical about the impact of Nash Pay in the short to medium term and hopeful about increased volume on the exchange going forward. However without a significant increase in retail trades I don’t see an incentive for the institutions to partner with Nash just yet.