Cryptocurrency Liquidity: Challenges and the OpenOcean Solution
Liquidity plays an important role in the successful execution of any cryptocurrency trade. When the liquidity is there, it becomes easier for the trades to be scaled in real-time. But when it is not, it will take time before orders will be confirmed or executed.
Cryptocurrency Liquidity Challenges
Here are some of the issues you are likely to come across when liquidity is not sufficient for cryptocurrency trades:
1. Liquidity Cannot be Accessed
One of the issues you will notice is that it is quite hard to access liquidity on some Decentralized Exchanges (DEXs).
This is usually because of the disparities or differences in the prices. The price of a cryptocurrency on one DEX tends to be different from the one on the other.
2. Low Slippage is Missing
You tend to spend more funds when executing your trade orders on some cryptocurrency DEXs.
This is usually the case when the DEXs don’t have the facilities to look deep enough to be certain of the slippage levels and to find convenient ways to reduce the slippage.
The Proposed Solutions by OpenOcean
#OpenOcean is a cryptocurrency trading protocol that wants to resolve most of the issues tenable in the traditional DEX ecosystem.
It starts with the enablement of liquidity access and follows it up with the reduction of the slippage.
The 3-Step Model
A majority of all that OpenOcean will achieve can be executed in three steps. These steps are:
- Step #1: Price Quotation
The first thing that OpenOcean does is to get an idea of what the prices of different crypto assets are like on other trading platforms.
It checks the prices of these crypto-assets on both the Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs).
- Step #2: Comparison and Optimization
The second step is to compare the prices of the crypto assets. As expected, most of these assets will have different prices or quotations on the CEXs and DEXs.
What OpenOcean does, in this case, is to compare the two prices. Afterward, it optimizes and finds the best routes to leverage or use towards the reduction of the slippage.
The reduction of the slippage is one of the veritable means of offering the users/cryptocurrency traders the opportunity to trade the crypto assets at a fair price.
- Step #3: Price Communication
OpenOcean does not just find better trading options for its users. It does that intending to help these users or cryptocurrency traders to make informed trading decisions.
So, the third step is for OpenOcean to communicate the best prices after the analysis. The users or cryptocurrency traders can then take advantage of these low slippage options to execute trades of their favorite crypto assets trading on both the DEXs and CEXs.
Final Thoughts
Cryptocurrency trading has come to stay. We just need to play our parts to ensure that the cryptocurrency trading ecosystem is attractive for everyone.
OpenOcean has just come up with innovative means to make that work and I think it is one of the best trading channels you should explore for maximum returns.
#DEFI #DEXAggregator #OpenOcean #OOE
More information can be accessed from OpenOcean Official Website
Ericks1
