We are living in the digital age, where people and businesses are willing to transact with one other from opposite ends of the Earth. But it’s not easy:
- Transaction charges are pretty high.
- Numerous compliances/paperwork are involved.
- Escrow or intermediaries charge a bomb for bridging the trust deficit.
A decentralised online marketplace, where buyers can discover and work with verified service providers from across the world. Payment is processed in cryptocurrency in a safeguarded environment, with extremely low intermediary fees.
How It Works
- Pick a popular cryptocurrency with a low gas (transaction) cost, e.g. MATIC.
- List services that can be fulfilled remotely, like content writing.
- Invite service professionals, who are willing to get paid in the crypto.
- Get buyers to avail the services securely.
- Allow them to swap their coins with exchange partners.
- Act as an escrow by holding the crypto paid by the buyer for the service.
- All transactions are reflected on the blockchain, for transparency and trust.
- Release the payment on service completion.
- Only intervene in case of a dispute and let the marketplace grow.
Pricing / Business Model
With minimal transaction cost, even if you charge a 5% intermediary fee, you can make a killing; that too paid out in an appreciating asset! You can choose to liquidate just enough to meet your company expenses and see the rest grow in value.
The buyer and seller also benefit, as the transaction cost is brought down from the current 15-20% level, with the same level of security, and with no regulations/paperwork involved.
While disputes are rare with funds held in a 3rd party escrow (~1%), you can settle these events for a 3% additional dispute fee.
Let’s be conservative and assume the average transaction size across different service categories to be at the lowest band of 0.018 ETH (₹5,000). We also assume that just 50% of acquired users become active, initiating 5 transactions for services in Year 1.
With proper marketing, an easy-to-use platform and quick payouts, you can expect similar profits for the first year into operations:
|Users acquired (A)||10,000|
|Total transactions (B = A*50%*5)||25,000|
|Avg. transaction value (C)||₹5,000|
|Total volume (D = B*C)||₹12,50,00,000|
|Intermediary revenue (E = D*5%)||₹62,50,000|
|Dispute revenue (F = B*1%*C*3%)||₹37,500|
|Total revenue (G = E+F)||₹62,87,500|
|Avg. acquisition expense (H)||₹100|
|Total acquisition expense (I=A*H)||₹10,00,000|
|Other marketing expense (J)||₹3,60,000|
|Platform running expense (K)||₹5,00,000|
|Gas fee (L = D*0.3%)||₹3,75,000|
|Annual pay for 1 ops staff (M)||₹4,80,000|
|Total expense (N = H+I+J+K+L+M)||₹27,15,100|
|Total Y1 profits (O = G-N)||₹35,72,400|
So, as you can see, you don’t need to break your bank for executing this scalable model. While you may need to spend roughly ₹2L to build the online marketplace, set up the wallet and processes for transfer and recording on the blockchain, the cost pays off pretty quickly! With just one employee, you can scale the platform to ~ ₹35L in profits.
And if you don’t end up liquidating your earned profits, they keep appreciating with the rising cryptocurrency. Isn’t it amazing?
For the idea to work and people to trust the decentralised web platform as an effective intermediary for availing cross-border services, the tech needs to work smoothly. It should be able to support millions of transactions and be secure. A single error can result in massive losses in both crypto and trust. User experience and performance will be key.
We (Timespade) would love to build the platform for you. This would include proper brainstorming, UI/UX designing, development, thorough testing, and optimising it on regular basis for success.
If you’re interested, let’s get on a no-strings-attached, discovery call and discuss doing it together 🙂
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