Implications of Lack of Liquidity of a Crypto Exchange

Benefits of liquidity and how Aurix Is implementing a highly sophisticated and liquid digital currencies ecosystem

Orders will go through quickly on an exchange with high liquidity. Liquidity is the ease of converting an asset into liquid cash, or one digital currency to another.

This is a very significant aspect of the cryptocurrency market. And as the market has kept on growing, the scale and traffic of transactions have guaranteed digital currency traders with high liquidity.

But a big problem exists among upcoming exchanges with low usage numbers, and those trying to gain traction.

It turns out these new exchanges are unlikely to command a followup because new users are likely to exit immediately when they come in due to these exchanges’ associated low liquidity level.

There are three major liquidity challenges Aurix Chain Ecosystem seeks to solve: Market, asset, and exchange liquidity.  

Majed Mohsen, with a strong background in computer science, embarked on a journey to solve the world’s toughest problems in Fintech.

A journey that gave birth to the Aurix Chain Ecosystem; a blockchain meant to deploy various Fintech solutions under one package.

Lack of liquidity affects cryptocurrency exchange and so, we look at how Aurix intends to solve the problem of liquidity and cashless transactions. 

Implications of lack of liquidity on exchanges

  1. Lack of market stability — The lower the liquidity, the higher the volatility of a market. This also means traders have to wait around the order book for their trades to be fulfilled. Sometimes, a trader has to raise/lower a digital asset’s overall price and also the bid-ask spread.
  2. Control by Whales — An exchange’s market could be controlled by a single act, conducting a large transaction where the market lacks liquidity. 
  3. Slow transactions —Transactions take more time in an illiquid market. This is a limiting factor that could lead to loss. Traders require a highly liquid exchange and market to open and exit from trading positions, quickly and frequently.
  4. Tough to conduct technical analysis — a highly liquid market is easy to analyze both technically and fundamentally. Charts for illiquid markets are slow and boring, while more liquid markets have highly precise and developed charts. 
  5. Loss during big market swings — Low liquidity is detrimental to a trader’s profits. Traders have to wait for long  periods in a less liquid market, which could make dips, devastating than in a highly liquid market. 

Liquidity solution as proposed on the Aurix chain whitepaper

The Aurix Chain Ecosystem intends to solve the problem of liquidity by admitting a large user base into its exchange. 

Unlike other exchanges which charge transaction fees and have high hidden fees/commissions, Aurix is based on the premise that Fintech solutions should be cheap, easy, and efficient.

For this reason, the exchange employs a cashback strategy, which pays back a particular percentage of a trader’s bid, depending on the trader’s membership tier. 

This ecosystem also has its native token, the Aurix Token (AUR). The token can be exchanged for other cryptocurrencies, cutting down transaction fees for committed users, providing discounts, and finally for staking among investors. 

Aurix will be the go-to system for seamless trading activities

You will find an intuitive user experience that takes into consideration both, the starting trader and pro trader. This is a platform you can use on the go because it comes with the flexibility of a web version and a mobile version.

Besides, you can use a debit/credit card ( from Visa or Mastercard) to make payments on the exchange, on the go.

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