A Two-sided Liquidity Marketplace to Meet Demand for Global Crypto Liquidity | Hacker Noon

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@elizabeth-levineElizabeth Levine

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Global digital asset trading network Apifiny is adding a two-sided liquidity marketplace to its crypto market-making platform, ExOne, to solve the lack of global liquidity in crypto trading.

(Disclaimer: The author is a PR consultant for Apifiny)

The new marketplace will tap into interconnected exchanges and allow exchanges and token issuers to easily purchase liquidity from scores of new market makers who can automatically sell liquidity. 

The two-sided marketplace is an interesting approach and proven in other businesses outside of crypto.

For example, take Google AdSense — a wildly successful two-sided marketplace that allows small advertisers (buyers) to connect with new audiences and website publishers (sellers) to monetize their audience by easily selling ad space. 

Google AdSense collected $146.92 billion in 2020 in ad revenue, helping drive new demand for ad inventory by making ad space available to legions of small advertisers on over 38.3 million websites so far in 2021.  

Apifiny’s marketplace will allow hundreds of thousands of professional traders and investors to become new market makers by automatically connecting them to exchanges and/or asset pairs that need liquidity.

In theory, expanding the scope of market-making to new parties would fuel trading market growth even more. Apifiny also claims to offer some of the lowest industry fees.  

Enticing Institutional Traders 

Today’s exchanges are disconnected, operating in isolation from each other. As a result, to achieve sufficient liquidity, traders must connect with multiple exchanges using different APIs, whose reliability varies widely and requires high development and maintenance costs.

And without enough distributed IDCs to connect exchanges across the world, trading speed is often too slow for professional traders. 

Traders need to deposit large positions, and transferring those positions between exchanges is also slow and expensive. In addition, high withdrawal and transfer fees also force many traders to store their funds on centralized exchanges, which poses a huge security risk.  

The end result is today’s international trading systems lack enough liquidity and are too complicated, slow, and expensive. 

“We believe a two-sided, liquidity marketplace that connects the world’s exchanges with new, untapped liquidity sources will solve these challenges,” said Haohan Xu, CEO of Apifiny. “Institutional crypto traders will no longer be on the sidelines. A two-sided liquidity marketplace will help unify a fragmented global trading landscape into a single, thriving global market.”  

The new two-side liquidity marketplace will be available in late Q2 or early Q3 of this year. 

According to Apifiny, professional traders will benefit from superior price discovery, tighter spreads, higher fill rates and capital utilization, and faster trade execution. Faster execution would also help exchanges attract more professional traders, creating a virtuous cycle of market growth. 

Last month Apifiny announced its plans to go public by the end of this year. The company is accelerating its product development, partnerships, and new hires as part of that effort.

Apifiny said it connects and trades with 24 exchange partners, including 10 new exchanges over the past 3 months, such as Crypto.com, Huobi Global, OKEx, Kucoin, BitMax, HBTC and Blockchain.com’s Exchange among others. 

The company also noted its customer roster includes the top 5 US exchanges and 23 of the top 100 global exchanges by trading volume across 12 countries and 4 continents.  

It will be interesting to see how the race for global liquidity plays out. Right now there is no single crypto exchange that provides a unified global trading market with efficient access to global liquidity and price discovery. Each exchange acts like its own trading “lake” with no “canal” connecting one exchange to another. 

The company (or companies) that ultimately connect all the world’s exchanges will win big — and help accelerate the growth and maturation of global crypto trading.

(Disclaimer: The author is a PR consultant for Apifiny)

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