The market data market of 2017 is gargantuan in size. At more than $27 billion in confirmed spending per year(according to 2016 reports), demand continues to grow with no end in sight. This is the market that launched Thomson Reuters to a market capitalization of $44 billion dollars and Bloomberg LP to a colossal $8 billion in revenue per year… this is for market data alone. The true demand for market data is likely several times these figures; Consider that most hedge funds and large investment trusts are spending fortunes building custom data feeds. And that’s before factoring the cost of information changing hands.
When you consider the above numbers, you’ll conclude that the world’s’ most sophisticated traders and investors are willing to pay whatever it takes to create an information advantage that leads to profitable trading. It’s on this desire that businesses like Bloomberg made their name. But are they the future of the crypto-asset markets?
At Santiment we’ve taken a hard look at the data vendor business models and conclude that they’re on their way out… but wasn’t clear what would come next. So we made it ourselves: Santiment aims to be the next generation of market data vendors, though we’re focused exclusively on the crypto-markets. To show what we mean, let’s dive into the business model of the world’s’ largest market data corporation, that of Bloomberg LP.
Bloomberg generates revenues of about $8 billion per year, a colossal figure that continues to grow each year.Over 80% of these revenues come through subscriptions to the Bloomberg Professional Service, aka the Bloomberg terminal.The terminal gives you access to data feeds for the entire global economy, and is arguably the most advanced trading terminal in existence. These terminals have the ‘low price’ of just $20,000 per year per user, which many professional traders and investors have no problem paying for. After all, when you get access to the world’s’ most sophisticated data feeds platform, it just makes sense, right?
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Numbers drive trading and investing success. And because money scales, that makes data the ultimate financial commodity.
But there is a cost to pay; The subscription fee is one-size-fits-all. You pay the price and get everything Bloomberg has to offer. Most traders use only a fraction of those feeds for the specific markets they trade, while de facto subsidizing the rest of the platform. Not to mention that $20,000 a year prices out independent traders, leaving Bloomberg with a core clientele of high networth hedge funds and investment banks and little else.
While the crypto-markets are just getting started, they foretell the distribution and democratization of finance, trading, and investment. Crypto foretells the passing of increasing value to consumers throughout finance, and market data is no exception. Santiment will ensure that.
While the one-size-fits-all terminal model may work well for traditional finance, it could never work for the crypto-markets. The advantages of the Bloomberg terminal that hook traders are meaningless in the crypto-economy, while the price point is unacceptable. That’s why Santiment is going down a different path.
Santiment data feeds will be available via an on-demand, tiered subscription service, where you can purchase your feeds a la carte. Crypto-traders and investors will have the option of paying for data feeds individually or as packages, giving them full control over their spending. There will be no need for them to subsidize the entire data feed library; They’ll be able to customize their feeds to serve their specific needs whenever they want
They’ll also be able to access a limited number of feeds by staking SAN tokens. Staking tokens allows them to try and sample a wide set of feeds with minimal barriers and no cost. If a crypto-trader wants to see if Santiment is right for him, he only needs to buy and stake enough SAN to cover his trial tests. If he decides the service is unnecessary, he’s free to sell his SAN and recoup his investment. If he sees that Santiment provides value, he can subscribe to his desired feeds and continue testing new ones with the remaining SAN stake. Additionally our 3rd party partners like exchanges and asset management platforms will be able to stake tokens on behalf of their user base at preferential rates, allowing users on partnered services to test even more feeds at an even lower cost.
There are some data feeds and content, particularly crowd sentiment related types, whose value diminishes in proportion to the number of users who have access. These exclusive data feeds and content will be available strictly by auction, ensuring their utility and keeping them premium.
Finally, we will provide some information for free as a public service, most notably the SANbase (Santiment database). The SANbase will serve as an anti-scam tool in the space by giving traders and investors a single place to gather all the information they might need about a project. By providing the SANbase for free, we’ll have a clear and useful way of introducing Santiment to the entire crypto-community.
We’ve thought carefully about how to bring data vending and market data to the crypto-markets. The business model we designed combines the best features of traditional data vending (a wide library of data feeds and a subscription model) with the incentive mechanisms of cryptocurrency (staking and auction models). Through this model, we will drive value to the hands of consumers, which will lead Santiment to market dominance. We also believe that by passing savings on directly to the consumers from the very start, Santiment will be able to pre-empt forays by traditional data vendors into the crypto-markets.
By designing the Santiment business model this way, Santiment can establish itself as the market data infrastructure of the crypto-economy in addition to marking itself as a next generation data vendor.