Phemex: Exchange with FREE zero-fee trades?

Hey everyone, it's Michael and welcome back to box mining today. I want to take a look at Femex exchange and this exchange is something you really want to pay attention to because as one feature that can really save you some money, it has a new model where it doesn't charge you per trade. It's free trades on a spot exchange. And the bottom line here is that if you're buying and selling one Bitcoin per month, then you're actually going to save more money on Femex exchange than any other exchange out there. So in this review, we're going to talk a little bit about this zero fee trading model. It's really an industry first. And I really see that this is something that needs to change in exchange space. We actually want to save more money because prior to doing this review, I did a tally and I found out that every month with the amount that I'm trading, I'm literally spending $555 worth of us dollars on trading fees, which is ridiculous. I mean, there's a reason why they say the house always wins, but with the Femex with their premium trading model, they're going to charge you 999 per month and all trades on there will be free afterwards. In fact, they even have an annual plan of $70 per year, which is still less than the amount I'm paying per month, and that will be a year of free trade. Now, full disclosure, before we start this video, I am working with Femex to help with their exchange promotion and every link you can click below. If you click that link below, I will get a commission for the sales of that as well. I do want to say with all reviews, I do reserve my right to give my opinion. That's the most important of them all. So I hope you guys will join, enjoy this review. And if you guys have any comments of your own, if you have any feedback as well and tell me how your experiences leave that on a comment section below. I really want to find out how you are finding trading on Femex exchange as well. So let's dive into the good stuff first. So what does Femex offer? And it's the zero fee trading. It's the first exchange, the first major exchange to offer this feature. Basically, if you sign up as a full premium user, your trading fees for web and app will be zero. That's being said, of course, there are some terms and conditions. For example, if you're using the web API. So if you're an algorithmic or a bot trader, you can't benefit from this. Or if you're an institutional trader, you can't benefit from this either. And if you are using the contract trading platform, the fees are the same. So you still get charged fees. So this is only for those who are trading, buying and selling cryptocurrency, which of course I am. Now it does cost a little bit of money. So it costs $9.99 per month or $90, $69.99, $70 for an entire year. So prior to finding about Femex, I didn't do a total tally of how much I was paying the exchange. I knew it was something. All right. I knew these exchanges were making billions of dollars off our backs, but I just didn't really know exactly how much. So I actually did a deep dive on my trades and I'll show you a little bit of that here. So this is a screenshot of my Binance trading account. And you can see in April, I was buying Bitcoin very well at $6,828 with a trading total of $3,222 US dollars. So that's okay. But you can also see that with the amount executed, there is fees, right? So every single transaction has associated fees. And so you can see that already in a single transaction, it can be $3, $4. And this adds up to be quite a lot. So especially if you have a lot of orders, so going a little bit deeper into the fee schedule, we can see on spot trades alone. So I'm going to see that in the next one, I traded 82 Bitcoin worth of BTC and at my current fee rate at VIP one, my current rate, this is my maker and taker fee. So 0.0675 or 0.7075 for my taker. So with that, I just averaged it out and I calculated that to be 500 plus US dollars worth of fees. That's a crazy amount to be paying Binance. And this is why Binance is making money off me. And this is why in many senses, migrating a lot of those Bitcoin transactions and trades over to Femex will save me a lot of money. So what about the exchange interface itself? Is it easy to use? Is it easy to understand? The good news is I spent around a month playing with it and I found that the interface is very, very intuitive. So if you want to do spot trades, you have the four coins on the top left hand corner here. Just select the coin you want to trade. Femex has stated that they're adding more, a lot more coins in the future. And that's going to be interesting to watch what happens in this area too. And then you can see the order book, which is what's happening here. And also the charts. If you actually like charts, you can go for a trading view charts full screen and you're good to go. In terms of orders, it's pretty self-explanatory. You have both limit and market orders. Typically speaking, what I usually do is if I want to buy Bitcoin and save right now, I just typically set a bid order at the kind of just beating the lowest by a little bit. That's typically what I want to do because obviously I want the best price for it. And that works quite well for this exchange. Or you can select market order where you can just immediately buy Bitcoin at the current price. So pretty self-explanatory there. The other part about the exchange is of course the derivative side. So this links both spot trades and contract trades together. Now with contract trades, one thing to note here is that the discount from the premium membership doesn't count. So the premium is only for spot trades and for contracts, they're taking fees as normal. But as with all exchanges, contract trades are less fees. They have less fees than normal spot trades. It's important to remember that contract trades are extremely powerful and they can be easily misused. Typically speaking, what I found with a lot of experienced traders is that they hedge certain positions or they make certain very tested strategies when it comes to trading. So it's not to get out of kind of trading with passion, but rather with certain strategies. So definitely this is very, very high risk. And obviously read up on contract trades if you don't know what it is. The contract trade itself, it looks exactly the same as a normal spot trade with the difference being you have the option to buy or long or sell slash short an asset. What that means is that you can take advantage. If you want to short, you can take advantage of Bitcoin prices going down. And if you want to buy long, obviously that's just like buying Bitcoin, but with certain leverage. Now, as always, we want to know a little bit more about who's running the exchange because that's very important in terms of establishing trust. So in this video, I got a call with CEO Jack Tao and asked him a little bit about the passion behind the exchange and also the security features as well. And Jack, for just a starter, I mean, I see you guys have a really nice office behind you. Obviously you're passionate. Can you tell me like why you kind of even started the exchange in the first place? Thank you, Michael, for inviting me here. And it's a great honor. I have to follow your YouTube since 2017. Thank you. And actually, that's how we started. And in the later 2016 and earlier 2017, I started getting to know about Bitcoin. And one of my friends from JP Morgan, actually, he introduced me to blockchain. And I read the white paper and it was amazing. So, and my partners and I started thinking about open some business in the blockchain space. And we find that open exchange is making perfect sense. You know, at that time, there's a lot of exchanges opened, but they didn't operate well. I got a lot of audages. And even for the biggest one, they have like a flash crash. The Ethereum price crashed around $300 too. If you remember, right? I remember it dropped to zero. It dropped to zero. So just because of trading order matching issues, it dropped to zero. It was a flash crash. Just wiped everything off, right? And that was coinbase too. Ether. Yeah. Yeah. Ether. And I think there's one guy that purchased a 3,000 ETH at a price like 10 cents. Right. And even now, even now that because the group exchange, yeah, the total different from the traditional one. Right. It operates 24 hours by a year. Right. Non-stop. Right. Even for FX trading, foreign exchange trading, they closed on Sunday. So the technical wise is totally different. So my background is I work for Morgan Stanley for 11 years. And so my team is building trading system, cross engines connected to almost all the exchanges in the world. And I was the leader of the global dev team and for Morgan Stanley electronic trading system. So I know exactly that how to build, how to build exchange to support this kind of business. So obviously the exchange is actually quite special and novel as well, because you've been offering free trades. And this is something that really enticed me to do this in the first place, because I looked at my trading volume and I saw I'm spending like $500 plus on just a single exchange. And I'm like, why should I be spending that much? You know, how does that work? You know, what inspired you to do that? It's a, it's, it's a, I have multiple reasons. One is in, we're looking to the traditional market. Like, uh, uh, many people may know that last year, that, uh, almost all the, uh, retail broker, uh, announced that a big zero, uh, commission for retail users. And start from, uh, Chelsea's work. Well, and, uh, and, uh, even in mainland China, if I remember correctly, they are starting lowering fees and that becomes zero fees for, for retail users. I think, I think it's a trend that, uh, it's, uh, as a financial service, your, your, your, one of your responsibility is to reduce fees for, for clients. And especially for small, uh, small capital users, majority of their cost is on, is on, is on the, uh, fees. Right. And, uh, for the institutional clients, uh, they willing to pay more fees, but have a better service like data wise, analysis wise. Right. So that's two different groups. So we, and we announced our zero fee permission, it just to benefit our retail customers. And we realized that indeed, as you and I all trade a different exchange, right? We pay a lot of fees indeed. And those are changes. Now, obviously this is a big model change. And I think one of the worries I had initially was like, how do you guys make money? Right. You guys have a, you know, very cheap annual membership, 70 bucks per user. You know, how are you going to, if you're going to let retail, um, trade cheaper, how are you going to make money? Yeah, that's a good question. So, so first that, uh, as I mentioned earlier that, uh, this membership, uh, zero fee is for mainly for retail users and for institutional clients that they treat. The larger volumes, uh, they will have other services. They will be charged based on that they're trading volumes, but we provide the other services, data services and, uh, financial services, credit services. So we provide a more advanced service for them. One of the biggest concerns I've always had is security. So I've been in this space long enough. I've experienced Mt. Gox collapsing. How are you securing up your exchange? Yeah. Security is, uh, it's just another one thing or one technology is it's a whole system. Right. So first that, uh, in FIMEX, we use, uh, we only use, we will only use, uh, using the, uh, code wallet, uh, developed of our own team. And, uh, but the code wallet is not the, not, not the only thing. Right. So the code wallet has, has, has its own security and we keep the private key well. Uh, and, uh, after we launched the spot trading, we also have the hot wallet, the hot wallet that we only have a very small portion of the hot wallet, the funds in the hot wallet. So if in the global bridge, uh, the damages is still in control. Right. Mm. The second thing is the policy. The only thing they've seen in fit numeroze is is was the Anything meilleure process because for the oblivion of cho Tot Night, which Aquí we are seeing in the Queue. But it's a very small portion of the place that our client is screenAA, which I understand. Uh, it's a tiny Ande<|id|> those malicious users. The third thing is that every single withdrawal is reverted by a person. Another big part of FEMEX has also been the futures exchange. There's always kind of a mystery. How does the futures trade and options work together? Does the options trade side affect the prices that's going on in the spot trades? What's happening with these advanced trading tools? So it's definitely increased the total trading volume. In the crypto world, it's similar to traditional markets. So usually traditional markets, you have a stock exchange, right? If their trading volume is one, and you will see the OTC in the derivative trading will be like 100 times bigger. And we see this trend in the cryptos as well. And because they've put the leverage, which means that you don't need much capital to hedge your position. So there's a lot of advantages for people to hedge their risks and to capture opportunities. So it's very good tools. I don't feel surprised that the volume keeps increasing these days. And regarding the pricing, it's kind of like, I think maybe one or two years earlier, and we still see that spot trading markets like Coinbase, finance, finance, their price, it may be dominated the price trend, right? So all the derivatives will follow their trend to their price for the pricing. And then nowadays, it's like sometimes a 50-50. And that's kind of they kind of impacted each other based on treaty volume, based on the buy and sell pressure. We're always talking about insurance funds for options trading, because sometimes spot obviously has a huge impact here. But sometimes when it comes to your futures market, there's the orders are not stacked the same, right? So the number of shorts versus the number of longs. It's not exactly the same. So occasionally, the exchange might have to fill in those little gaps between liquidations. And we saw something pretty bad happen with OKEx, for example, where a flash crash caused the exchange to have overexposure of a certain asset. And then there were callbacks on user accounts. How would Femex protect users against actions like that? So our insurance is similar to like BitMax and other exchanges. It's basically to prevent user go bankrupt and even owe the money to the exchange when they already being like a bankrupt, become that the total value becomes zero, right? So and due to the flash crash or sharp drop of the price or sharp raise of the price. And the insurance funds is the idea is every time that people get liquidated, it will have a padding, a small portion of the money they liquidated will contribute to the insurance. Just in case some disaster happens and some other people get bankrupt, they need to pay more for the liquidation. They will get the fund from the insurance fund to pay back the other users. So all the buyer and seller actually are equal. So if you have one buyer buy one contract, they definitely have a seller contract. So that's the even. But when someone goes bankrupt, then the buyer or the seller may own more money than he has to the other side, then insurance funds will trigger. So that's the purpose of insurance funds. I think that's the flash crash that happened because it was a flash crash. And then during the crash, the exchange started liquidating accounts. But the problem is they couldn't liquidate fast enough, right? Because in those few seconds, the price kept dropping. So there was a forced liquidation, but the exchange got kind of left with the owner with the trade because they couldn't find an appropriate match, right? So I think, so how big is the exchange, the insurance fund right now that you guys have right now? If I remember correctly, we'll have about almost a 200 BTC, you know, a BTC contractor insurance fund. Okay. And I don't know. Yeah, I didn't remember the number. It's, it's all accumulated slowly, sometimes dropped a little bit due to the liquidation. And the problem you mentioned that has, has multiple facts. One is when there's a sharp drop or sharp raise, usually that you will have a liquidity issue because the market maker may have defend themselves and escape away. They, they probably quote a much higher or much lower. And then the liquidation and the liquidation price has to pay more to liquidate the position. They will charge more from the insurance fund. The second thing is the performance of, of the exchange. If the exchange is too slow, which is one of the biggest problem one to solve, right? It's too slow. And they, the price keep dropping and they slowly liquidate it. They get to get the worse and the worse price and the pay and more and more from insurance fund. That's also another problem contribute to this. So how do you share faster matching? What's your secret sauce? Or can you describe like kind of roughly what technology you're using to make the exchange faster? There's not much secret, but a hardworking and the experience. So my team, myself is, I worked for 11 years for this business. I'm the developer and we have Du Yang, who was my colleague in Morgan Stan as well. He also worked in Hong Kong exchange for a couple of years and lots of a team member from other bank system. They have from infrastructure team and from trading to index team. So we have the experience to know how to build a real exchange, a modern exchange that can take this business. You know, there are a lot of technology you can use, but regarding architecture and which technology you use is totally different, right? So you can use many languages to build the functionality, but to achieve the performance, you have to use the right one. So we know exactly how to build it. That's our advantage. It's a huge advantage. We saw a lot of exchange. We know that the CTO, that technical background, and we know that what's their problem. And that's the things we try to avoid. The second thing is that we build everything almost from scratch. And the one key thing is to reduce the dependency on third-party libraries because their code and their performance is not guaranteed. Even for some good open source projects, they build open source and they build a lot of functionality that they need. So make it become, the system become heavy. And so you have to understand how to use those open source correctly. If you want to make everything fast on your critical path, you have to like to remove lots of functions or just write your own one. So we spend a lot of time. So you wrote your own one? Yeah. We even, we even published that we even published a technical paper on our blog to, to, to, to share our the core architecture. And there's, I remember there's a Russian technique, uh, technology forum, and that they reviewed our paper and they give a lot of a combat, uh, comments and the feedbacks. And, uh, they said that it's very, uh, it's not normal, like exchange will review their core architecture. And so give them a lot of insights of how we build an exchange. And we think everything may, they think everything makes sense. The third thing is that we, in the test net, we provide our performance testing environment. So there's a button if you, if you, you have to apply for it. Okay. And, uh, it will simulate a high trading volume environment. I'm sending like a thousand, thousands messages per second. And we're executed. And then you can, you can place your own order to test if you have any lagging or performance issue during this high trading volume system. That's what we are the only, we are the only exchange to provide this kind of simulation testing that. That's cool. If you can enable that for me, I would love to try it and see how that goes. And, um, yeah, hopefully you can record that and, um, see it, um, in action because that's obviously, I can send you, we, we make a, we made a demo on YouTube. I can send you that demo. Of course, of course we can book a window for this. Cool. Sounds good, Jack. So thank you so much for spending the time to talk to us and, and guys that rounds up the FEMEX review. So I think one of the biggest key points to take home here is their zero fee trading model. I definitely think this is an innovation and much needed change in the cryptocurrency space. I've been spending way too much on exchange fees and it's about time that we have zero fee transactions. And honestly, I don't mind paying that premium for it because I did the math, even one month of fee right now can pay for a whole year on FEMEX. Now, of course the small exchange doesn't support all currencies. So right now it is limited to Bitcoin, Ethereum, ripple and chain link. FEMEX has stated though, that they are adding a lot more coins in the future, and they're looking to add almost all the top 50 coins in cryptocurrency space. So that will be very, very interesting to watch. If you guys are considering using the spot exchange or even the futures exchange on FEMEX, make sure you use the link down below. It is an affiliate link. And by doing so, you will support the channel. I don't know. I'd love to hear what you think about the exchange and I hope it does save you money after all this. I definitely hope, you know, that feature is useful for you. And I'd love to hear what your comments are about it. And with that, guys, thank you guys so much for watching this video. Make sure you click the like down button down below, click the subscribe button and I'll see you in the next one. I just did the hand signs the wrong way around, but you guys get the picture. See you in the next video.