Liquidity for crypto exchanges

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Liquidity for crypto exchanges

Liquidity implies sale of means in a short time at a favorable cost. Faster it’s to sell, more liquid product is. In crypto-currency community, coins having high crypto-liquidity are readily exchanged for fiat money or other cryptoassets. Liquidity meaning in crypto may be explained as follows. For this category, there is always a high demand from vendors and relatively low spread if comparing purchase and sale costs. A low level means increased coin volatility and unstable demand from market parties. For this reason, when purchasing a low-liquidity crypto-currency, probability of vending it at same cost is much lower. In simple words, if there’s a huge amount of vending, and prices for trading do not differ much, then it’s considered good and reduces risks.

Crypto Exchange Liquidity Providers

Plenty of crypto-exchanges and services are facing cryptocurrency liquidity tasks. It’s because it is difficult for new players in this niche to resolve this issue due to the lack of fairly simple solutions. For young companies with little start-up capital that are just entering the market or are at an early stage of development, this issue will be too costly to resolve. To resolve the issue, tools and crypto-services are offered by crypto-liquidity firms. Such organizations are often referred to as market-maker or crypto-trading bot for exchanges. Large firms offer acceptable terms even for young companies and provide a wide range of tools to improve the efficiency of the client’s site.

To ensure liquidity, market-maker performs the following functions:

  • keeping quotes within price range;
  • minimizes price gaps (spread).

There is another way to increase turnover on exchanges – this is cooperation between sites. For example, one stage runs out of coins, and it buys from the one with them in the right amount. This does not create a shortage and, accordingly, does not give a sharp upward price jump.

Who are crypto platform for liquidity providers

As a rule, liquidity providers for crypto-exchangers are a company or firm holding funds on its accounts in order to organize their sale. They are active both on the side of the buyer and vendor. Successful LPs create a lot of influence. Trading scale, first of all, depends on them, and not on ordinary users. Accordingly, the more trading time market-maker takes, more attention he/she’ll be able to engage.

There are many more points to bear in mind choosing a good cryptocurrency liquidity provider.

  1. Reliability. Performance analysis is a time-consuming process. But is there any point in killing for this time, if honesty is in question? Therefore, it is worth starting with checking regulators of LPs. Moreover, the reliability of the latter also needs to be checked. Many have heard about the risks of fraud, so you need to work only with a reputable market-maker.
  2. Execution. Crypto liquidity provider exchange must perform operations directly. Deviations are allowed if there’s a convincing argument. Everyone who works with a market maker needs to be able to check operations through automated software that allows you to build detailed statistics. In other words, transactions must be transparent.
  3. Pricing. You need to be absolutely sure that the instruments, like the transactions themselves, are not burdened with swaps. This point requires special care, since there are not many firms in crypto-world offering their sales bots.
  4. Providing data. Crypto exchange liquidity provider must possess stable channels without gaps in charts. Feed should reflect prices on several exchanges and provide means for comparing them. Access to marketing space history is an integral part of a quality market maker.

Any service operating in the field of finance or investment should display information about its activities. This is correct when cryptoliquidity firm has a complete reporting toolkit:

  • email notifications;
  • reportings on closed and open transactions for the requested period;
  • profitability report;
  • statement with exchange points;
  • tick history.

Our specialists offer high-qualitative liquidity crypto exchange services. Cooperating with our partners, we contribute to ensuring liquidity of your crypto-exchange on favorable and profitable terms.

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