Gerrit van Sittert | July 13 2022
Gerrit van Sittert | July 13 2022
Orion Protocol: the value of Orion’s low gas fees
Low gas fees for decentralized trading delivers compounded value to Orion’s users. Orion, as a decentralized exchange aggregator, differs from centralized exchanges by optimizing the use of blockchain smart contracts. Existing centralized exchanges (CEXs) keep a record of trades without the need for smart-contracts to settle trades immediately into users’ off-exchange wallets. This saves on extra gas fees but doesn’t offer the full security of the blockchain. CEXs still end up charging multiple fees to their users, which vary from exchange to exchange. Other decentralized exchanges (DEXs) can bypass the drawbacks of CEXs, but offer nowhere near the liquidity necessary for practical trading. Orion’s aggregator technology quickly opens access to the depth of liquidity typically siloed on CEXs while offering decentralized access with minimal gas fees.
Orion continues to grow and offer lower fees. Users can already trade using the BSC, Fantom, and Polygon blockchains, which offer near-zero gas fees. In combination with the Orion Bridge for cross-chain trading and the addition of upcoming low-cost chains, fees on the Orion network will continue to incentivize traders.
Fees on Orion vs fees on CEXs
It goes without saying that low gas fees are a priority so that users can increase their bottom line. However, the incentive goes a step further on Orion. Being that Orion is a decentralized application, it places emphasis on the use of smart contract transactions. Smart contracts are blockchain interactions that require gas fees. For the sake of the efficiency of the Orion Protocol, gas fees need to be minimized so that the flow of smart contract transactions remains continuous. Uninterrupted transactions are key to streamlining the Orion user experience while also keeping fees low.
In contrast, gas fees play a less significant role in the business model of a CEX. Here, they are typically necessary only for depositing and withdrawing crypto. CEXs will rely more on other income streams, like trading fees or extra charges on deposits and withdrawals. The fee schedule for any given CEX will vary, and so will restrictions on fiat and crypto transfers onto and off the exchange. Users need to remain conscious that they can remain profitable, given the nuances of any given CEX. CEXs will also differ on their custodial practices over users’ assets. The safety and accessibility of users’ assets remain a concern.
The value in paying fees
This all begs the question, why pay fees in the first place? The simple answer is that fees are necessary to help make a sustainable business out of a service. The more complicated answer is that some business models provide more value for every dollar in fees paid.
For example, for the fees paid on any CEX, users receive a custodial wallet and access to trading on a select range of assets. The value of the service on any given CEX is limited due to the security vulnerabilities and siloed markets of centralized systems. Users can often be cornered into paying high fees or will have to abide by restrictions like minimum withdrawal amounts.
However, Orion builds value through consistent access to assets across multiple exchanges. There is no more need to understand fee structures from one exchange to the next. Using Orion as one decentralized access point also minimizes the security risk of exposure to multiple gatekeepers. Paying Orion’s low fees means gaining the value of multiple exchanges on one consistent platform without giving up control to them.
What are Orion’s fees?
The Orion Protocol network utilizes fees as a means to monetize 18 revenue streams in the ORN token economy. The ORN token plays a central role as a payment mechanism on any connected chain. Users can opt to pay fees with the ORN token, which is the most affordable means to do so.
Orion Bridge and more low-cost chains
Orion’s simplification of exchange services is leading a new way forward in crypto. After all, crypto is a financial technology innovation, and it is about time that exchanges implement the financial technology they sell. Orion is pioneering the means for decentralized practices to go mainstream while keeping fees low.
Orion is unbounded by the limits of typical exchanges. New chain integrations constantly multiply the possibilities for DeFi on Orion, including the addition of more low-cost chains. Fantom, Polygon, and the Binance Smart Chain are existing giants that optimize efficiency and low fees on the platform. As crypto grows, Orion is an aggregator that can grow with it in versatility and affordability.
Fees also apply on the Orion Bridge tool for making assets tradeable across available chains. Orion Bridge is another example of an Orion service integrated into the ORN token economy. Users can utilize any available low-cost chain to keep their gas fees to a minimum. The more chains added to Orion, the more assets that can be traded cross-chain under Orion’s low-cost umbrella.
The future of fees
Each successive cycle of bull and bear markets has brought larger overall growth to crypto. The current bear market can be said to mark the tail end of a cycle, which saw crypto as a market mature a great deal. For example, Bitcoin is being considered a commodity, and crypto is well on its way to regulatory clarity.
CEXs themselves have also come a long way. In the bull market of 2017, their practices and level of adoption were nowhere near as robust as they have now become. As CEXs are now closer to reaching maturity, DEXs are more in their nascency.
Thankfully, DEXs have a higher degree of security built into their foundation. What any participant can hope to see is that DEXs develop to reach a more critical mass of adoption in upcoming cycles. At that point, we could expect to see decentralized low fee trading become the norm.
Orion is setting an example for what decentralized trading can become. For the first time, the best of CEXs and DEXs can be combined to offer a simplified solution for market cycles into the future. Orion’s low fees prove that we can have an aggregated solution that can remain economically viable and attractive to users.