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Transmission 48 – LZF.COM and Incentivized Trading

Saturday 26th, September 2015 / 20:48
Transmission 48 – LZF.COM and Incentivized Trading

This week, Theo talks with LZF (formerly PSCOIN) a new crypto exchange that uses a different model than traditional exchanges.

Instead of simple limit orders that can be retracted at any time, at LZF.COM you have to pay a royalty to place a limit order, and this order collects royalties depending on the stake of the order. The stake is roughly the size of the order times the price of the order.

Incentivize Trading

The longer the order is on the books, the more royalties it collects. If someone cancels an order, then they lose the royalties that go with that order, and they are given to the other orders on that side of the trade – buy or sell. Sound confusing?

The reason it might sound confusing is that this a different way to trade. In most cases at exchanges you can place a limit order and retract it at anytime before it is filled. There is no incentive to place a limit order and keep it on the books. This is what LZF is trying to do, incentivize a trading behavior.

“I started thinking about how could you put the incentives on the market to get exactly the kind of behavior that you want that constitutes healthy behavior in a market.”

The exchange also uses PS KEY for security. PS KEY is not only a decentralized 2FA but a way of using a blockchain to manage online identities. If you want to place a limit order and hold it for a while, then LZF sounds like a good place to do it.

Transmission is a weekly podcast featuring bitcoin, altcoins, and blockchain technology broadcasting live every Sunday at 3PM EST. The Spice Must Flow.

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