Paradex Vs Extended: Who should pay fees?

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This is a dynamic debate hosted by Trevor (Delphi Digital), featuring Anand "Fiddy" (Co-founder/CEO of Paradex and Paradigm), who champions the zero-fee model and flow curation, and Ruslan (Founder/CEO of Extended), who advocates for a fee-based, sustainable business model that prioritizes product quality and user acquisition strategy. The core of the discussion revolves around how perpetual decentralized exchanges (Perp Dexes) can compete with centralized exchanges (CEXs) like Binance, particularly regarding fees, market microstructure (RPI/Toxicity), and sustainable token economics post-incentives (post-TGE).

Key Concepts

- Zero Fees as a Disruptive Model: Fiddy argues that the last frontier to compete with CEXs is fees. Just as Robinhood forced traditional brokerages to go commission-free, zero fees will force CEXs to follow suit.

- Price Sensitivity: Ruslan argues that pure retail users are price insensitive and prioritize convenience, security, and product quality over marginal fees. Fiddy counters that power users (the 20% who drive 80% of volume) are fee-sensitive, and acquiring them is key to an exchange's lifeblood.

- Toxicity and Fee Model: Fiddy asserts that fees should be proportionate to flow toxicity (risk to market makers), not volume. Zero fees for takers (non-toxic users) and charging makers (who benefit from curated, benign flow) flips the model on its head.

-Sustainability: Ruslan questions the sustainability of a zero-fee model, arguing that it diminishes essential revenue streams needed for successful token economics. Fiddy clarifies that Zero Fees does not mean Zero Revenue; the model still generates revenue by taxing makers for the value created by RPI (Retail Price Improvement) and by expanding into horizontal product lines (e.g., options, lending).

- Commodity vs. Differentiation: The founders debate whether trading is a commodity (Fiddy: yes, meaning competition shifts to cost) or if the user-facing product and distribution can be sufficiently differentiated to sustain a fee-based model (Ruslan: yes).

- Retention Post-Incentives: Both agree that post-TGE user retention depends on building a genuinely killer, sticky product quickly. Ruslan emphasizes shipping fast, product breadth (Unified Margin, mobile app), and new user acquisition strategies.

Timestamps:

1:00:04 Introduction & Market Context (CEX Trust Issues, Perp Dex Migration)
1:02:58 Fiddy (Paradex) on Why Zero Fees is the Key to Competing with CEXs
1:05:20 Binance's Incentive: Why They Haven't Adopted Zero Fees Yet
1:06:58 Ruslan (Extended) Counters: Retail is Price Insensitive, Product Quality Matters More
1:12:48 Fees Matter for Power Users (20% of Users, 80% of Volume)
1:15:52 Zero Fees and Maker Incentives (Ruslan questions flow retention)
1:25:36 Fiddy Clarifies: Zero Fees is User Acquisition to Sell Other Products
1:31:25 Zero Fees is Inevitable Fee Compression, Not Zero Revenue
1:32:07 Maker Taxed for Value: Zero Fees + Flow Curation (RPI)
1:37:54 User Retention Strategy Post-Incentives (Points/Airdrops)
1:42:30 Product Commoditization vs. Differentiation in a Hyper-Competitive Market
1:55:09 Extended's Retention Strategy: Killer Product, Ship Fast, Acquire New Retail Users
2:00:40 Builder Codes (Wallet Integration) and Zero Fees as an Alignment Tool
2:06:02 Conclusion: The Zero Fee Model is Flipping the Model on its Head

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