New trading network aims to bring liquidity to crypto markets
A new blockchain-based platform has been launched aiming to bring greater levels of liquidity to the cryptocurrency market so that trades can be settled more effectively.
Blockstream Corp, a San Francisco-based start up, launched the Liquid Network on Thursday, promising faster and more secure trade settlement by linking to multiple cryptocurrency exchanges, market makers and brokers around the world.
More than 20 of the industry’s biggest players are participating in the Liquid Network venture, including Bitfinex, OKCoin, BitBank and CoinOne.
Importance of liquidity
The lack of liquidity – the speed and ease with which investors can buy or sell assets – in the cryptocurrency market is seen as one the main reasons behind the heightened volatility among crypto assets.
It is a problem that must be tackled before any participant in the industry can hope to attract the institutional players that would bring growth and a natural source of liquidity to the market.
But quicker transaction times would help. The problem is matching buyers with sellers – particularly when considering the exchange of some of the less common – more esoteric – coins in the market.
Liquid Network describes itself as a “sidechain” built on the Bitcoin network that facilitates faster transactions while ensuring users’ assets are protected through a “geographically diverse federation”.
“If there’s one thing our traders need, it’s speed,” says Paolo Ardoino, chief technical officer of Bitfinex.
“Liquid delivers that in spades. Liquid’s instant settlements will allow our traders to achieve faster bitcoin deposits and withdrawals, more efficient arbitrage, and even better pricing though tighter spreads.”
Samson Mow, chief strategy officer at Blockstream Corp, is the former chief operating officer at bitcoin exchange BTCC – also part of the Liquid Network. He says: “I was one of the first supporters of Liquid while still at BTCC.”
He addds: “I saw the potential of the network and technology for the cryptocurrency industry. It’s exciting to see the Liquid team deliver on that promise. Now our focus is to build out the Liquid Network ecosystem.”
Earlier this week, Singapore-based liquidity provider Tilde announced its partnership with cryptocurrency trader TradAir to launch a new platform aimed at bringing high-liquidity electronic trades to institutional investors in Asia.
It, and other institutional grade platforms such as Caspian, can provide high-liquidity services including over-the-counter trading services along with negotiated block trades and algorithmic trading.