Wootrade
Providing deep liquidity cryptocurrency exchanges, wallets, and CeFi platforms with in-built order books
Defining the liquidity monopoly problem
Presently, traders looking to execute large transactions with low slippage have to resort to using only the biggest exchanges or over-the-counter trading. This leads to a vicious cycle where liquidity and users get siphoned away from smaller exchanges and promotes a monopoly of several top exchanges. To compete, smaller exchanges looking to acquire and retain traders on their platform have to resort to their own internal market-making teams or rely on expensive market makers to bootstrap liquidity for their order books.
Internal market-making carries its own share of high hedging costs due to sizable commissions on other exchanges. Hedging is the process of offsetting risk by trading an asset, usually on a secondary platform, to protect against adverse price movements in the market. In volatile cryptocurrency markets, this skill is crucial to protecting the financial stability of an exchange.
External market makers are also deterred by the opportunity cost of market-making on an illiquid exchange, considering that their assets could be deployed elsewhere with more trading volume to earn better returns. Furthermore, they face custodial risks by diversifying their assets across multiple smaller exchanges. The exchange must provide them with very favorable terms to account for these risks and opportunity costs, causing smaller exchanges to incur even more expenses.
Wootrade’s liquidity solution: Democratizing access to the best liquidity pool
Wootrade disrupts the liquidity monopoly by democratizing access to deep liquidity. Exchanges can access WOO Network via API integration and immediately upgrade their order book depth and tighten their bid/ask spread, which allows for more direct competition with top exchanges.
On top of that, Wootrade enables partner exchanges to hedge on WOO X, without having to hedge on other exchanges with high commissions and slippage. Features such as full cross margin, competitive interest rates, and auto margin rebalancing are also provided.
The difference Wootrade's liquidity as a service makes is easily visible. For example, our partner exchanges have been able to offer traders hundreds of thousands worth of USDT order execution at minimal slippage. Today, if an order is placed on partner exchanges like Gate.io, Ascendex, Hoo, and MXC, the liquidity may be sourced from Wootrade’s liquidity pool.
In essence, Wootrade is providing a base-layer liquidity solution that exchanges critically need. Instead of worrying about liquidity, these exchanges can now focus their resources on security, customer acquisition, and developing even more innovative products and services.
Ultimately, value accrues to the WOO token because when an exchange client onboards, they must either pay fees or stake WOO tokens as outlined in the Zealous Rhinos program.
Last modified 3mo ago