8th April, 2020, Singapore – Liquidity on crypto exchanges generally refers to the ease with which tokens can be converted into other tokens or cash. This is closely related to the market depth and volume of exchange transactions, in correlation with the number of users, level of activity and amount of funds being transacted. While important in traditional stock markets, in crypto markets, liquidity plays an even more critical role.
With regards to an article about exchange data, Huobi founder Li Lin once commented: “Asset volume and liquidity are the core indicators of the strength of an exchange”.
Likewise, Zhong Gengfa, founder and CEO of ChainUP, has often mentioned the importance of high-quality assets to the development of an exchange and how liquidity constituted the core experience on an exchange.
Since its first client in September 2017, ChainUP has identified the importance of liquid products on an exchange. As a leading blockchain technology service provider, ChainUP has formed 8 mature product lines that include cryptocurrency exchange, liquidity support, wallet, situational awareness, public and alliance chains, mining pool, blockchain cloud media as well as broker services.
The BitWind liquidity brand integrates the liquidity of 300 exchanges from all over the world served by ChainUP. The purpose is to create a liquidity experience comparable to those of top exchanges and aid in the increase of transaction volumes.
The Liquidity Solution
The second half of 2019 saw exchanges faced with a severe challenge – the battle for higher liquidity. However, this could also be viewed as an unprecedented opportunity. With the competition amongst exchanges shifting to infrastructure factors such as technical services, market software, situational awareness services, decentralized asset derivatives and professional quantitative market-making platforms, the general trend has been for professional service providers to intervene in this ‘liquidity competition’.
“We see that many customers encounter standard difficulties when they begin operations,” shared Gino, BitWind Liquidity Product Operations Director, to Jinse Finance. “A commonplace feedback from our increasing base of customers has been the crucial role liquidity plays in operations. It is a pivotal pain point facing exchanges.”
Targeting customer needs, the independent BitWind liquidity brand launched by ChainUP took more than half a year to hone. The goal was to provide the best market depth and trading experience, helping exchanges navigate processes smoothly. While the product is made for B2B businesses, it can cater to the range of novice exchange teams, operating exchanges, wallet dealers, brokers, institutional traders and more.
Deeper Liquidity Pools, Capacity to Operate More Freely
By establishing BitWind as the ecology center and aggregating the liquidity of more than 300 exchanges in the ‘upstream’ to provide liquidity for the ‘downstream’, the BitWind product has built a liquidity pool that can service all mainstream currencies in the market.
Exchanges need only add a trading entry on their platforms to access the shared liquidity and aggregation market of the underlying trading network in order to provide trading services to their end-users.
BitWind supports spot liquidity, ChainUP’s privatized ETF liquidity, and platform currency liquidity amongst others. An exchange only needs to open a credit account to access liquidity and more freely create liquidity from the leverage function. Notably, ChainUP has a dedicated network price aggregator with the fastest price quotes and ultra-low order delays, with features like one-second price comparisons, one-click trading and low-buying and high-selling.
Through ChainUP, emerging exchanges can directly access sufficient traffic, optimal quotes, lower spreads and the best market depth, avoiding the risk of arbitrage losses while increasing trading volume. In a bear market, it can leverage both operating value and capital value. In a bull market, it can maintain its competitive edge and instantly grasp market opportunities.
ChainUP currently serves more than 500 global customers and this includes 300-over cryptocurrency exchanges and 100-over digital wallet customers from more than 20 countries in Southeast Asia, Europe, America and the Middle East. The huge aggregated user volume consisting of millions of customers naturally creates liquidity. BitWind serves more than 150 liquidity customers. The synergies of the various flows in the ecology form siphoning effects that create sustainable positive cycles.
A Differentiated Competitive Advantage
“BitWind has 300 exchange depths, comprehensive transaction functionalities, high-performance matching engines, powerful technology, 3-5 times spot leverage allocations, minimum transaction delays and support for 100 public chains and 8 major protocols,” said Gino regarding the advantages of Bitwind’s liquidity product. “In addition, the ChainUp’s core technical team comes from BAT (Baidu, Alibaba and Tencent) backgrounds. Jun Du, Hu Donghai and other founding team members have a deep and professional understanding of the industry and ChainUP has insisted on being a dedicated technical service provider. These are all factors that have contributed to BitWind’s competitive advantages.
Liquidity – the Lifeblood of Small and Medium Exchanges
The lack of users and trading volume sound the death knell for small and medium exchanges. ChainUP liquidity product BitWind takes on the role of a large customer on the exchange placing large numbers of purchase orders. Saving novice exchanges from a cold start, small and medium exchanges can concentrate instead on customer retention and avoid the risks in market making. In the industry battle for liquidity, ChainUP’s BitWind has pulled off a masterstroke.