How Does a ‘Zero-Fee’ Pool Manage Its Operational Costs?
A 'zero-fee' pool typically covers its operational costs through other means, such as internal self-mining operations, collecting the transaction fees (or a portion thereof), or through Miner Extractable Value (MEV) extraction. It may also be subsidized by a parent company or serve as a loss leader to gain market share or promote a specific cryptocurrency.
Glossar
Miner Extractable Value
Arbitrage ⎊ Miner Extractable Value, within cryptocurrency markets, represents the profit potential available to actors capable of identifying and exploiting temporary discrepancies in asset pricing across different exchanges or decentralized finance (DeFi) protocols.
Operational Costs
Expenditure ⎊ Operational costs within cryptocurrency, options trading, and financial derivatives represent the recurring expenses necessary to maintain trading infrastructure and execute strategies; these encompass exchange fees, data subscriptions, and computational resources for algorithmic execution.
Synthetic Long Position
Position ⎊ A synthetic long position in cryptocurrency derivatives, particularly options, replicates the payoff profile of owning the underlying asset without direct ownership.