Crypto Liquidity Providers
Liquidity plays a major role in attracting traders and investors. The ability to exchange an asset for cash quickly and participate in efficient markets reduce direct and indirect transaction costs. Thus, choosing a top liquidity provider is an important task.
Why does crypto business need a crypto liquidity provider?
Having a top liquidity provider as partner can truly accelerate the crypto business growth. Crypto project or exchange business, having high liquidity and deep order books will surely help to attract more traders and investors. Plus, it will also help deliver a smooth trading experience to users by minimizing slippage and reducing direct and indirect trading costs.
What does a liquidity provider do?
How does a liquidity provider deliver all those benefits?
Liquidity providers have significant amounts of assets under management that they use to provide liquidity or, in other words, “make the market”. These assets are put in both fiat and crypto pairs (according to collaboration agreement) to execute buy and sell orders made by traders. The orders are fulfilled 24/7/365 thanks to advanced trading technology and robust risk management systems in place.
5 Factors to evaluate a top crypto liquidity provider on
Technology
The best liquidity providers work with automated or algorithmic systems that fill up the order book with both buy and sell orders and execute them when matched in a matter of fractions of a second. As such, whenever a trader or an investor wants to enter or exit a trading position, they can do so in an instant.
Such quick execution benefits all market participants and encourages increased trading volumes as everyone can quickly exchange their digital assets for cash or other assets.
Advanced trading systems and exchange API integrations are at the heart of any top market maker strategy.
Trading Volume & Funding
Other important aspects for evaluating a crypto liquidity provider are their:
Daily trading volumes.
Trading as a % of the total market trading volume.
Assets under management.
The liquidity levels that can be delivered on e.g. a daily/weekly/monthly basis.
How much of their funds will be allocated for liquidity provision for e.g. specific pairs etc.
Supported Exchanges & Geographical Reach
The liquidity provider’s exchange network and integrations can significantly help with increasing a token’s popularity and trading interest. Each new exchange and geographical market comes with a unique opportunity to gain new traders and investors.
A top partner will offer both:
Introductions to new exchanges, facilitating a faster and cheaper listing process.
Rapid results on exchanges where the liquidity provider is present (and the token is already listed on).
Reporting & Communication
Ad-hoc reporting dashboards with frequent (real-time, hourly, daily) insightful reporting is standard practice. So is regular communication through client-dashboard.
Risk Management
At the heart of the success of any liquidity provider and market maker is a top-grade risk management system. This ensures robust operations in all market conditions, ensuring service delivery 24/7/365.
How can you distinguish a good crypto liquidity provider from a bad one?
There have been notorious malpractice cases across market makers, exchanges, and projects, such as pump-and-dump schemes and wash trading. Such activities are highly unethical, as well as illegal in regulated markets. The top crypto liquidity providers and market makers will never offer to engage in such activities nor promise specific trading volumes or cryptocurrency prices.
Bad practices:
Promising specific prices, trends or volumes.
Wash-trading.
Pump and dump schemes, cornering and ramping.
Good practices:
No promises on specific prices, trends or volumes.
Maintaining of a pre-defined bid-ask spread service level.
Supporting a crypto project with intros to get listed on higher-tier exchanges.
Why Choose Crypto Swiss Hub ?
We provide liquidity to over 1,200 crypto asset pairs and are fully integrated across 50+ centralized and decentralized exchanges in over 20 countries.
Our trading volumes in 2021 exceeded $50 billion, and, currently, we make close to 1% of the global crypto spot trading volume. We can offer significantly high liquidity levels via AuM to our trusted partners.
Crypto Swiss Hub competitive advantage lies within our global reach of leading and emerging exchanges, offering expansion to the most-lucrative markets for crypto projects and providing world-class industry-leading service to cryptocurrency investors.
Do not hesitate to check out our earn page or reach out to us directly by filling out our contact form.