Whether you are an institutional or retail virtual assets trader, you want to make sure the platform you are trading on has the lowest latency, lowest fees and holds the highest standards to secure its traders. Unfortunately, today this is not the case, where virtual asset markets suffer from:
Exchange-to-exchange liquidity fragmentation: In the traditional world, due to regulation liquidity is synced across trading platforms. For example, if you were to purchase stock from exchange A, and at the exact same time, the same stock was traded on Exchange B, the best price will be provided regardless of the exchange - known as best execution.
Lack of best price discovery and execution: As mentioned above, we can look at it from the crypto perspective where order prices differ from exchange to exchange. Due to an unregulated market, there is no need for exchanges to conform and provide the best execution price.
Market manipulation: Exchanges are working in silos and the users have more control over stock fluctuations by creating cells to pump and dump so to speak. As well, an individual or trading entity can also manipulate the market by creating fake orders to manipulate the price - these are strategies that have been deemed non-compliant in traditional trading and have consequences if practised. Fake volumes and order books created by exchanges to attract new users are also a major concern that is highly non-compliant in the traditional world. In the digital assets world, these tactics are used due to a lack of regulation.
Interoperability between venues: cross-chain and fiat related issues are challenges that create unnecessary steps to provide a more seamless experience for the user. For example, when you buy crypto from various platforms across the world, the fiat of a country may not be accepted.
Thin volume across trading pairs: There are over 500+ centralised exchanges and many more decentralised swapping platforms where 10% of the platforms (mostly centralized) hold the majority of the liquidity. This leaves many smaller exchanges trading the same assets but with very low volumes, making them inefficient to trade.
Price disparity between venues: the price of a single coin can drastically differ from one exchange to another. The disparity between exchanges is due to fragmentation caused by an unregulated ecosystem.
Lack of regulatory framework for institutional participation: There are a few regulators who regulate crypto access, currently 3 in the world, one being in Abu Dhabi, United Arab Emirates.
Major counterparty risks: Lack of onboarding due diligence, loss of funds, fraud, platform non-compliance, lack of broker liquidity vs commitment, theft, etc.
Wide spreads: Due to lack of liquidity, spreads can be vast.
High latency trades: Infrastructure is not practical (i.e. the network used, trading platform, database, matching engine, gateway, algorithm, other) lack of liquidity, ownership of liquidity.
These are challenges that the industry faces, with the primary one being latency, that no one has been able to solve. Current solutions are expensive and difficult to implement, requiring large upfront costs.
Cryptocurrency liquidity fragmentation across centralized exchanges
FLUID combines resources across member exchanges, connecting institutions and retail users with a universal order book. The technical architecture provides seamless interoperability between member exchanges, resulting in unified global liquidity and a stabilized market. Thanks to the latest technology, multi-party transactions are settled instantly across all chains, exchanges, and trading pairs using a blockchain-based solution overlaying an MPC wallet architecture.