I strongly believe that liquidity is what makes or breaks any exchange in its early days, and that this will be the case for Bitsquare, and I do have some data to back that up.
I have been using referral programs for localbitcoins and multisigna for quite a while, generating some over 100 sign ups per month for each one. In case you don’t know, multisigna is kind of a halfway point between a traditional exchange and what you guys have here - they use multi-sig so the exchange never holds user funds, but everything is done through their website.
Over the months I have been able to observe a drastic difference in conversion rates from site visitor > registered user > user who has made a trade for these two exchanges - localbitcoins is at least 15 times better from click to trade. Since the traffic is coming from the same pages, and since I have even played about with moving the positions and text etc to see the effect, I can be pretty confident that its not because of the traffic - this is a precise like-for-like comparison.
Multi-signa is a great service; it is not difficult to use and until Bitsquare launched it offered distinct advantages over the competition not available elsewhere. So I don’t think people couldn’t figure it out or just didn’t like it. A lot of them did register too, so it wasn’t the site design putting them off from the start.
Because of this I’m pretty confident in concluding that Multi-signa never really took off because they never built up had the liquidity enough to be useful for the casual user. The order-books were always sparse or empty - and this makes the vast majority of users simply take a look around, see the empty orderbooks or large spreads and simply leave never to return. They never reached that critical mass.
The main thing an exchange customer wants is to buy or sell for the best price and as quickly and hassle free as possible - everything else is a secondary concern for most people, so this seems to make sense to me.
I think for Bitsquare to succeed it needs to take action to build liquidity and pad out the orderbooks in the early days until that critical mass of users is achieved, and I think a DAO would be a perfect way to do it.
Perhaps there is some way that there could be an automatic distribution of tokens based on milestones for total transaction volume? Not sure how that would work as there doesn’t seem to be a user-profile, but perhaps an opt-in system which tracked your identity to be eligible for this reward could work? The great thing about this is it can be adjusted to provide higher rewards in sparse markets and can also be reduced or eliminated in time without losing the liquidity gained - because by then your high volume traders are also already your shareholders.