centralized exchanges dipping into dex liquidity pools

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Quote from: donlogan on September 09, 2020, 04:49:07 PM

Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

I think the next trend could be centralized exchanges offering their own liquidity and staking pools because the largest exchange called Binance have already announced it and others can follow it too so lets see how it all goes.

kindbtc

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Quote from: donlogan on September 09, 2020, 04:49:07 PM

Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

I think many big wallets are already doing this and there is high probability that most of these wallets are backed by exchanges. So looks like exchanges, wallet services and different crypto funds are making the most out of this situation.

donlogan

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Quote from: Tytanowy Janusz on September 10, 2020, 02:17:51 AM

Quote from: donlogan on September 09, 2020, 04:49:07 PM

Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

It is possible, but liquidity provider takes currency risk on his arms. The main condition for the delivery of a stable, safe trading platform is to stay as far as it is possible from unnecessary risks. CEX takes fee from others taking a risk trading on CEX and it can also take fee from others taking a risk from providing liquidity in liquidity pools - binance already launched it's own swap service that allow users to provide liquidity -https://cointelegraph.com/news/binance-takes-on-defi-with-uniswap-competitor-and-liquidity-mining

There's a trade off there though right? Between increased liquidity and the increased risk of liquidity pools. Does illiquidity not contribute to an unstable trading platform for CEX? Illiquidity holds back a lot of legitimate projects. And I would argue that it allows for shitcoins to fool people because they can manipulate liquidity. Because there's such a scarcity of liquidity people fall for it.

Again, I'll preface by saying I'm just a novice in understanding this technology. Hasn't Defi taken off on the principle liquidity? This is crux of the issue that we're trying to solve right? It's a fundamental problem that is always brought up by critics of this space.

rexxarofmoknathal

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Quote from: donlogan on September 09, 2020, 04:49:07 PM

Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

I know what you're saying on the surface without thinking of the technical details sounds sensible but there are always risks.
To elaborate on this regarding pool staking, well, here you provide your asset to the pool for a fraction of the conversion fees associated with the trades of that pool.

The matter is in fact not so simple as these pools are not so well regulated, there is little transparency about how they operate and there's the general risk of these staking pools not being run professionally - so security is seriously lacking which is the main risk.

Can read more about the topic here.

Tytanowy Janusz

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Quote from: donlogan on September 09, 2020, 04:49:07 PM

Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

It is possible, but liquidity provider takes currency risk on his arms. The main condition for the delivery of a stable, safe trading platform is to stay as far as it is possible from unnecessary risks. CEX takes fee from others taking a risk trading on CEX and it can also take fee from others taking a risk from providing liquidity in liquidity pools - binance already launched it's own swap service that allow users to provide liquidity -https://cointelegraph.com/news/binance-takes-on-defi-with-uniswap-competitor-and-liquidity-mining

donlogan

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Would such a thing be possible? I know a lot of exchanges have holdings in each other's wallets. For example, Bittrex could have a store of LINK on Kucoin.

Wouldn't it make sense for centralized exchanges to utilize staking pools to increase their liquidity?

I'm a novice at understanding these technologies so I might be off here in terms of the viability of such a transaction.

Topic: centralized exchanges dipping into dex liquidity pools (Read 140 times)