Author - Daniels Kenneth In category - Cryptocurrency exchange Publish time - 25 May 2023

This is why integrating with a reputable liquidity provider can set an exchange up for a long-term success, and not caring enough about liquidity only leads to problems. Simply put, liquidity aggregation is the process of combining offers to buy or sell an asset from different sources and directing them to executors. The purpose of aggregation is to enable traders to buy an asset as close to market prices as possible. Representational state transfer is a standard for a variety of web services. It enables exchanges of full asset management functionality including trading, private account data, trades data, public order books, and order management. By using a crypto exchange liquidity provider, an exchange or a broker can offer a tighter spread to the customer.

choosing the right liquidity provider

There is no “one-size-fits-all” but a diligent and thoughtful approach to the selection process can make you rise above the rest of your competition. Tightest spread does not equal Best Execution – as pointed above, tight spreads is an important consideration but it is irrelevant if “what you see is not what you get”. Optically, an LP can show you the tightest spread but if your user experiences a high number of rejected trades or poor fill rates , the forex liquidity providers quality of execution will deteriorate. This significantly impacts your firm’s reputation and adds a burden to your client support team to keep your customers happy. Your chosen LP must be able to work based on your needs and provide you with a transparent execution report analysing their performance upon request. “At AlpFin, we spend a considerable amount of time analyzing the quality of execution with our LPs for every trade our client put through us.

How to spot top liquidity providers and choose the best of them

After they will hand over their offers, compare them with several different characteristics such as pricing, fees, and cooperation terms. The one that suits them best to your requirements would be the best pick for you. The comparison table could then look similar to this one, of course with the characteristics that are most important to you.

choosing the right liquidity provider

I am a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader. CySEC, Cyprus’ financial regulator, has created a regulatory framework for authorized financial service providers. B2Prime is subject to the strictest financial market regulatory standards as a CySEC-licensed broker, financial stability standards, customer money protection, and clarity in all operations.

What role of liquidity in the brokerage business?

Different countries have adopted different stances on cryptocurrencies with them being banned in several, allowed in some or disputed in others. High liquidity also allows for greater technical analysis accuracy since price and charting formation in a liquid market is more developed and precise. You need to consider your goals and objectives before deciding which one is right for your business. A well-capitalized broker may provide cheaper pricing to its counterparties while still profiting. This article will explore some of the top crypto conferences that have taken place so far in 2022 and are still to come! Below we will list all the top crypto conferences and give an insightful overview.

choosing the right liquidity provider

So how do you determine the very boundary when it becomes clear that a supplier is performing poorly? For example, if a broker who uses the services of such a provider has orders sliding in an active session, this is a “red flag”. They should be detailed and trustworthy, showing real-time fluctuations of an asset. It is thus easier to swap digital coins in a deep-liquidity environment where buy or sell orders will be processed in a flash.

Popular risk management models: a broker’s outlook

“You got any Bitcoin?” One of the common openers in many social settings that leads the conversation into a spiral of whether crypto is a good investment. Today, we don’t bother about the whys but rather discuss how to get your hands on some crypto and show you how to read the trading dashboard. Do not hesitate to check out our crypto market making page or reach out to us directly by filling out our contact form! Advanced trading systems and exchange API integrations are at the heart of any top market maker strategy. Any action you take upon the information on this website is strictly at your own risk and we will not be liable for any losses and damages in connection with the use of our website content. If you have questions about how to organize independent liquidity aggregation on your platform, contact us and we will be happy to unfold a detailed presentation for you.

  • It is wise to choose a multi-asset provider who is able to handle every kind of liquidity requirement.
  • TechChill conference brought together 2,300+ attendees from all over the world.
  • The much anticipated post-covid event gathered top industry professionals to discuss the state of crypto, showcase Dubai as a crypto-friendly place, and Binance’s market-leading position.
  • Whenever addressing different LP types, Tier 1 and Tier 2 providers are mentioned.
  • For example, if a broker who uses the services of such a provider has orders sliding in an active session, this is a “red flag”.

BlockFi is another popular liquidity provider with over $10 billion under management sourced from over 1 million users across the world. Clients can buy/sell their cryptocurrencies as well as earn cryptos from using BlockFi. Additionally, they can earn 3.5% in BTC amounting to $100 with their BlockFi Visa Credit Card. Users can also borrow from BlockFi at an extremely low-interest rate of just 4.5%. The biggest merit of choosing a single LP is the cost of integration but it also represents a concentration risk that may bring down your business if the LP fails to perform as expected. Adding more LPs can help reduce systemic risk of over-relying on a single LP but it requires careful selection based on the quality of execution as discussed above.

How to add liquidity to your crypto exchange and why do you need it?

A certain model is possible in this business, which allows operating without liquidity aggregation. First of all, you need to check out all accessible information about the pool you consider investing in. Whenever you pick a liquidity pool, the best option is always one that offers you multi-asset liquidity, combined with historical data. You may also want to check if you could convert your preferable assets to fiat money and back on the platform. Now that you know what liquidity providers are and how they generate liquidity in different financial markets, it’s time to find out what strengths they have.

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