In the controversial area of retail financial trading, binary options is perhaps the product that has excited the most comment with accusations in the press of boiler-room scams and pressurised sales practices that would put wannabe wolves of Wall Street to shame. An interesting time, then, to be introducing a new person-to-person (P2P) platform into the space and certainly the launch of Daweda in May last year set the cat among the pigeons in the financial trading sector. Nearly nine months on, the chief executive and founder of the Cyprus-based operator puts the case for why more transparent P2P trading could help a sector that desperately needs some good news and might go some way to calming the fears of the financial regulators. In a sense, we have been here before in sports betting with Betfair, and regulatory upsets aside, the retail financial trading sector similarly looks ripe for the type of innovative disruption promised by the advances being made in fintech. For Daweda binaries are just the start – the notion of the exchange of contracts can be expanded into many other area, not just in retail financial trading.
GamCrowd: Daweda runs counter to the way people are thinking about binaries – this must have been somewhat bad timing to launch when you did?
Eran Gorodezky: Technically we started operations in March 2015. But the development of the platform took some time and we officially launched in May 2016 and we are still officially a soft launch. We still don’t heavily advertise the platform yet. That’s for a couple of reasons; when you launch with the new technology startup, it’s very intense. Changes are constant. You can’t predict how the team will operate, how the market will react. We are still trying to put everything together. Plus, we did some major changes to the product based on the initial responses of the clients. We took those very seriously; answering their demands. Because basically the platform is for them.
GamCrowd: How would you class the comments from the clients?
Eran Gorodezky: They are very suspicious. When they come to us it doesn’t make any sense that they get 100 percent of the money. They win more. They get their money back quicker. Small things that are very surprising for them. This is the situation now. On our platform, they ask a lot of questions. The trading model is different. They have to adjust, but once they have they become devoted clients. The P2P model is not new but what is new is the execution. There are very good reasons for doing the P2P model but there are also downsides for us as a company. Because we make less money than the competition. When you take this conflict of interest and give it to the client, you are basically losing money. But the execution is new. The layout. Building something for the long-term, which is unique. We have worked in the industry for a long time, and that is where our understanding comes from. We have more than six or seven years each.
GamCrowd: And the capability to build the product is because the technology is cheaper?
Eran Gorodezky: Yes, one of the exciting things about the platform is the technology. We have built a mini-exchange. We see ourselves as a technology company more than a trading company. We will be offering more products. We are a contracts exchange, between two counterparties. We aim to add more than binaries. We want to understand what the market is looking for. Currently it is kind of binary contracts. We have former or current forex clients that will never trade binaries but who like the platform. So the aim is to add more financial instruments as we go. Not stick with what we have now. We and the investors have really high expectations for the platform.
GamCrowd: You mention investors – how many investment rounds have you gone through?
Eran Gorodezky: I prefer not to go into that, but it’s not one group. It’s a couple of investor. Some smaller VCs. They see the potential; not what we do today, but the future potential. It’s not just money; it’s about pushing us forward. We are still relatively small; something like 12 people. The base is in Cyprus.
GamCrowd: The transparency of the platform is obviously really key to you…
Eran Gorodezky: It’s not about transparency; it’s about fair play. We don’t care whether the client is winning or losing. We don’t take sides. In the end we are only the platform. It’s everything related to fair play.
GamCrowd: One imagines that will be of interest to the regulators in the space?
Eran Gorodezky: Of course. The conflict of interest is immense in binaries and forex. So when a client loses money to the broker, it’s a built in conflict of interest. We have solved this because we don’t have a conflict of interest. Part of the problem is solved by our model. The person on the other side of trade is another client. You can see all the transactions on our site.
GamCrowd: This is presumably the future of all financial trading?
Eran Gorodezky: The regulator will see this, but we are the first. There aren’t a lot of sites like ours. We have a CySEC licence and they like our model. They understood. We hope the reaction will be the same for other regulators.
GamCrowd: Would it be like Betfair in the betting space, will you completely dominate?
Eran Gorodezky: Yes, if you compare the model. Our model is about fairness. Betfair solved the problem of you working against the bookmaker, who knows more about the market more than you. Cut out the middleman. So, everything we see today is about cutting out the middleman – Uber, Airbnb. You don’t need the bookies. This is the future of online. So we took our niche and came up with the Uber for finance.
GamCrowd: Do you have an app? Is your policy to be mobile-first?
Eran Gorodezky: We know that the future is mobile. Most of our customers register through the web, but play most via mobile. Of course it’s the future, but having a presence in both is very important.
GamCrowd: What is your relationship with affiliates?
Eran Gorodezky: Affiliates have a hard time digesting our model. Once you give all the power to the clients, for a small fee, we make less money per trade, because of our model, so we cannot afford to pay the price of others with affiliates. But some affiliates have seen the potential and have said they want to have a foot in the door of the future. This industry hasn’t had anything new to show customers for the last three or four years. Basically the product is the same across all operators at the moment. We prefer to work with affiliates like that. We try not to have misleading advertisements; we do things low-key, certainly compared with the competition.
GamCrowd: So what you are saying is you are more long-term?
Eran Gorodezky: Yes. We don’t want to risk our branding. We don’t want to risk it for the short-term. When people see the product –whether they are investors or affiliates – they understand what we are trying to do. It’s very nice.
GamCrowd: Is 2017 the big jumping-off point?
Eran Gorodezky: Yes. We want to start bringing in more clients, seeing the market reaction. We have traction already and we advertise, but it has been very low-key so far. So 2017 will be the big push forward. We have things we want to add to the site; what you see today is not the full version.