The crypto market is free for anyone to venture into, and tons of information is available. Yet, people consider crypto brokerage a niche that is not for all. The foremost reason that people offer is complexity. Unlike stock brokerage, there are wallets, stand-alone blockchains, OTCs, dark pools, centralized/decentralized/hybrid exchanges, and more. Each element has different interfaces, rules, and more. Yet, experts promise that it is not complicated.
Crypto Brokerage Platforms for Liquidity Aggregation
To reduce the complexity, experts have to unify the isolated fragments into one by solving cross-chain interoperability and crypto liquidity aggregation. To explain this clearly, let’s get to the basics first.
The Basics of Liquidity
Liquidity, in layman’s terms, means how fast one can make cash out of an asset. It has high liquidity if you can sell an asset and cash out without affecting its market price. In crypto, liquidity means an asset’s ability to be cashed out or converted into another currency.
Issues Stemming from Liquidity
Digital assets’ value is correlated to liquidity deviations. A market that is too volatile will have low liquidity, which causes sudden price spikes. Conversely, a stable market with no/few fluctuations will have high liquidity.
Low liquidity means you cannot cash out your assets at market value. Say you have an asset worth X, but no buyers are currently available. There is a very feeble chance of selling your assets at their market value, X. Other problems are price swings, market manipulation, slippage, and impermanent loss.
Since the crypto world is fragmented, its liquidity is also in the same state. There are several heterogeneous blockchain protocols daily, stand-alone apps, and more. Most of these are non-interoperable. Moreover, the hybrid exchanges, CEX, DEX, and others run with independent rules. So, a given cryptocurrency will circulate in these fragments under unique prices and volumes. It is hard to understand the actual market price of the asset. There are always multiple risks while trading through several exchanges.
So, the simple solution is crypto liquidity aggregation. Aggregating liquidity in a crypto world is an easier-said-than-done concept. You will have interoperability issues if you plan to execute an order with liquidity in different sources.
Challenges in Interoperability
To achieve interoperability, you should be able to transfer value between two blockchains without losing data reliability or security. However, each blockchain system is unique in its distributed data ledger.
To achieve cross-chain transfer, one should:
- Able to issue/disable tokens on the blockchains
- Rebalance the tokens across the system
- Able to choose blockchain features that need cross-chain transfer and those that are suitable for it.
- Able to realize the cross-chain transfer without regard to the absence of Turning-complete Smart Contracts.
There are several interoperability solutions like Oracles, sidechains & bridges, cross-chain, and cross-blockchain protocols, blockchain routers, atomic swaps, hashed time locks, and more.
Single Gateway Complications
The next hurdle is regarding a gateway that allows crypto trading with a transparent fee, good transaction latency, effective clearing and settlement systems, algorithm trading capabilities, and more.
In short, we need one platform that allows users to interconnect many stand-alone exchanges using a non-custodial automated trading hub with seamless transaction speed and minimal fees.
Resolving Challenges with a Crypto Brokerage Platform
Surveys reveal that 28% believed crypto is not secure, and 42% thought it is risky even though it has a high potential for short and long-term earnings.
PayBito offers a crypto brokerage solution with a large platform with access to more than 400 markets and twenty different fiat currencies. Thanks to the around-the-clock security management and investment advice from top players, anyone can gain better access to the crypto world. Beyond these, it has banking solutions like collateralized lending and custodial solutions.
How does a Crypto Brokerage Platform help Entrepreneurs?
You can perform cross-border payments via crypto and fiat currencies via a singular gateway with high-end security features. Crypto trading services are increasing in demand, all across the world.
- As a crypto broker, you can quickly gain access to a multitude of information and offer around-the-clock instant services to your client.
- Since PayBito is integrated with several major exchanges, you can expect high liquidity at all times, thanks to the consistent trading surges.
Crypto brokers earn around $181,609 per annum, and the field is just starting its upward march. Do you want to get cream of this cake? Jumpstart your career by registering as a crypto broker for free at PayBito.
25% of American adults are planning to start investing in crypto this year. Cryptocurrency has leaps and bounds to pass before everyone considers it a viable and stable investment ground. However, thanks to the crypto brokerage platforms and new technologies, we can expect these changes sooner.