What is a crypto liquidity provider?

TheGreatPython

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

I’m on the biz development team of a new token, we are self-funded, no IEO, ICO etc. We’re looking to list on a legit crypto exchange with real volume and we have funds to spend to secure the listing. Here’s my question, every exchange we talk to requires that we work with a crypto liquidity provider. What is a crypto liquidity provider, is this the same thing as a crypto market maker, as in someone that puts up their own crypto to make the market? Where can I find a crypto liquidity provider? Who are the best crypto liquidity providers in the space?

What liquidity providers do is that they fund liquidity pools with their crypto, they are the ones that will help in making the trades possible, and in return these liquidity providers are compensated with the fees of those assets they are providing liquidity for.

For example, anyone that wants to be a liquidity provider for your coin will fund the token and another token, which will enable people to be able switch or trade those two coins, let’s say for example he funds ETH and DAI, that enables traders to easily trade these two coins, and the liquidity provider will be compensated with fees. That’s just what it means. Maybe you can still research to understand better.

Harlot

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Quote from: https://coinmarketcap.com/alexandria/glossary/liquidity-provider#:~:text=A%20liquidity%20provider%20is%20a,passive%20income%20on%20her%20deposit.&text=For%20this%20reason%2C%20liquidity%20providers,the%20trades%20that%20they%20enabled.

What Is a Liquidity Provider?
A liquidity provider is a user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on her deposit.

This definition is coming from the glossary page of coinmarketcap and basically a crypto liquidity provider is the one that just provides the cryptocurrencies as a middleman which makes a trading of cryptocurrencies possible in that platform. It's the same thing on how underwriters work on IPOs where they are the ones buying the first batch of stocks from a company who wants to be public and then putting it on the stock market so it is available for sale. If you want to know more about its definition just click on the link in the quote as CMC has a whole page for it.

Dima_korbel

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Answer: The liquidity provider can be a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid–ask spread. At the crypto market appeared instruments similar to the forex market https://forextraininggroup.com/role-liquidity-providers-currency-market/ .
To find a good liquidity provider follow 3 common steps:
1. Choose most popular, trust exchanges on https://coinmarketcap.com.
2. Contact them and clarify the terms of cooperation.
3. Contract with the most convinients and get started.
Pay attention to the API protocol: it should be Fix API if it os possible.

After this exchanges usually use aggregation module to get exactly liquidity from couple of providers. Such instruments available now, just google it:
https://www.soft-fx.com/products/liquidity-aggregator/
https://www.forexchief.com/about/aggregator/
https://www.centroidsol.com/technology/c-aggregation

In the search process try find couple of reserve providers for cases in wich someone can't continue with you.

beerlover

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Let's assume you created a website, it is an exchange and you want to be in the top of the list so that you would look good right?
You pay a liquidity provider and they make it look like there is a lot of money traded on your website. Now, usually that doesn't mean they will spend their money, they will spend yours, and usually that is not even a person anymore, it is a bot that does it for you.

It means you pay some developers to actually use your own coins and it will help you look like you have ton of trading. This works for new projects as well, if you have a new coin that you are listing on websites, you can work with a liquidity provider and they will make it look like there is a ton of trade going on with your coin and looks like you are wanted by the people, but in reality it is not really doing any trades at all.

Harlot

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But is there such thing though ass a crypto liquidity provider? I mean if they are present in exchanges it would be noticeable on what they can contribute to these crypto exchanges. I mean if liquidity providers are present in this exchanges prices would be more stable buy and sell orders won't have big gaps as liquidity providers would match and create some of this orders none of that can be seen in some of exchanges I have entered.

yhiaali3

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Quote from: Aaroenz0r on June 29, 2020, 05:48:02 AM

Maybe you misunderstood the question. OP asked about liquidity provider not liquidity. Liquidity provider is like marketing company

Thank you for alerting me to this point, yes indeed I understood the question that it is about liquidity and not the liquidity provider so I answered as I understood. Anyway, thank you for alerting me.

Aaroenz0r

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Quote from: yhiaali3 on June 29, 2020, 04:02:36 AM

Liquidity refers to the ease with which an asset can be exchanged for cash without affecting the price of that asset. When trading in Crypto, you see there are liquidity of assets, exchange liquidity, and market liquidity. These three are important when technical analysis of any coin or token, because the more liquidity in the market the greater its stability, and vice versa we find the less liquidity the less demand for that coin.

Maybe you misunderstood the question. OP asked about liquidity provider not liquidity. Liquidity provider is like marketing company, they are a third-party service or sometime the Exchanges offer that services. By using this service, your project's coin will be guaranteed to have a certain liquidity rate on the Exchange. By doing that, you'll not need to worry about your coin being flopped on the market!

yhiaali3

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Liquidity refers to the ease with which an asset can be exchanged for cash without affecting the price of that asset. When trading in Crypto, you see there are liquidity of assets, exchange liquidity, and market liquidity. These three are important when technical analysis of any coin or token, because the more liquidity in the market the greater its stability, and vice versa we find the less liquidity the less demand for that coin.

dragon695

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Quote from: joniboini on June 27, 2020, 05:10:01 AM

Yeah it's the same thing. Basically they want you to make sure that your tokens have enough volume for their market. Some exchanges also have this service if you pay a premium. If your project is self-funded and doesn't have lots of cash to spend, consider listing on dex or something similar. Those liquidity provider will eat your money sooner than you think, not to mention the listing fee etc.

Let's think about crypto liquidity providers as an advertising company or marketing company. They'll do their part to make sure your tokens achieve your expected trading volume or liquidity. In that way, your token will not be a flop in the Exchanges and you can gain a reputation through the market. However, you'll need to pay for that service. Importantly, they just do their best and there's no guarantee that your project will be successful. It depends on the project itself!

bigcash2011

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

What is a crypto liquidity provider? Is it the same as a crypto market maker?

I’m on the biz development team of a new token, we are self-funded, no IEO, ICO etc. We’re looking to list on a legit crypto exchange with real volume and we have funds to spend to secure the listing. Here’s my question, every exchange we talk to requires that we work with a crypto liquidity provider. What is a crypto liquidity provider, is this the same thing as a crypto market maker, as in someone that puts up their own crypto to make the market? Where can I find a crypto liquidity provider? Who are the best crypto liquidity providers in the space?

Although crypto market maker and liquidity provider service has become a trend now and basically it is a requirement from exchanges to make sure the newly listed coin shows regular trades and just do not become dead and also to reduce the spread as described by friends in this discussion but personally I do not like it because it is more like fake or unnatural way of creating demand while organic demand is what matters, I think project teams need to create a passionate and active community that can be active traders as well and we have seen many projects that have successful activity and liquidity from day one and do not use any kind of fake bots or liquidity. I will also suggest the thread starter to work on their community and also marketing so as to avoid bot trading on exchanges.

sheenshane

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

What is a crypto liquidity provider? Is it the same as a crypto market maker?

Crypto market makers itself is also a process which makes traders can provide liquidity in both activity of buy and sell in the market.
This liquidity is much more important to your token development and marketing as well.

That is correct, do a little research about this and you will find out who is the best crypto liquidity providers in the space.

The content of this blog, "HOW TO GET BITCOIN/CRYPTOCURRENCY LIQUIDITY PROVIDERS" might help you to understand more about liquidity providers and the market maker how the become correlated.

Subbir

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You are right that within the case of crypto liquid delivery tokens aren't mentioned within the market there's a substantial risk but if a corporation wants to provide them to their lab through marketing then the project can convert tons of money through expenses. Before that we've to try to honest research on the market this sort of organization is provided in every lab.

joniboini

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Yeah it's the same thing. Basically they want you to make sure that your tokens have enough volume for their market. Some exchanges also have this service if you pay a premium. If your project is self-funded and doesn't have lots of cash to spend, consider listing on dex or something similar. Those liquidity provider will eat your money sooner than you think, not to mention the listing fee etc.

chip1994

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

What is a crypto liquidity provider? Is it the same as a crypto market maker?

I’m on the biz development team of a new token, we are self-funded, no IEO, ICO etc. We’re looking to list on a legit crypto exchange with real volume and we have funds to spend to secure the listing. Here’s my question, every exchange we talk to requires that we work with a crypto liquidity provider. What is a crypto liquidity provider, is this the same thing as a crypto market maker, as in someone that puts up their own crypto to make the market? Where can I find a crypto liquidity provider? Who are the best crypto liquidity providers in the space?

maybe it is one of those underground organizations. You can see that the tokens have a lot of fake volumes on the CMC but in fact there is no one trading there. Exchange side wants you to find a fake trade or bot team to trade your token so the volume is not too small. This is the prerequisite for listing on big exchanges. You should post an article in the Service section to find service providers.

cml2019

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

Who are the best crypto liquidity providers in the space?

They are out there you just have to do your research. I read this article (https://defirev.com/top-crypto-market-makers-2020/) on defi rev about crypto market makers. It says Kairon Labs, GSR, Alameda Research, and AlphaTheta are the best in the space. I’ve seen Kairon Labs mentioned before on here as well.

Expert3

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Quote from: RyanPK on June 26, 2020, 06:51:03 PM

What is a crypto liquidity provider, is this the same thing as a crypto market maker, as in someone that puts up their own crypto to make the market

Generally speaking no. The company listing usually puts up the liquidity and uses a crypto marketing making bot to control the spread. When you say crypto liquidity provider you are referring to a crypto market maker. Someone who takes the liquidity provided by your company and uses it to maintain a tight spread. In addition to protecting your tokens price from volatility this helps to attract organic traders.

LeepNetwork

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Regarding a crypto liquidity provider or providers, basically liquidity is just what it sounds like: how willing are other traders or institutions to give you liquid assets (in this case btc or another crypto) for your token. The more traders that are willing to buy your token with other assets the more liquidity your token has. If a large number of traders want to buy your token then it has high liquidity. If few traders want to buy your token it has low liquidity. Low liquidity equals high volatility and tokens that have low liquidity are subject to more frequent changes in price. This is obviously not good for the trader or the exchange. So, a lot of the bigger exchanges require you to provide liquidity to cover the spread and protect their users, i.e. traders on the exchange.

RyanPK

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What is a crypto liquidity provider? Is it the same as a crypto market maker?

I’m on the biz development team of a new token, we are self-funded, no IEO, ICO etc. We’re looking to list on a legit crypto exchange with real volume and we have funds to spend to secure the listing. Here’s my question, every exchange we talk to requires that we work with a crypto liquidity provider. What is a crypto liquidity provider, is this the same thing as a crypto market maker, as in someone that puts up their own crypto to make the market? Where can I find a crypto liquidity provider? Who are the best crypto liquidity providers in the space?

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