Cryptocurrencies saw values soar in 2021 when some investors sought a haven from the inflationary pressures. Additionally, retail consumption spiked across the industry, with data revealing that global crypto use had increased by more than 880 percent last year. President Joe Biden’s recent executive order on digital assets and blockchain was a significant step forward. However, financial institutions still need to see more visible progress before diving deep into the industry.
With the advancement of technology, financial markets have evolved exponentially. As more professional traders enter the digital asset market, it may be tempting to perceive markets from a conventional perspective. However, being a fast-growing, unregulated, rapidly developing sector, cryptocurrency markets have several essential peculiarities. Decentralization and open finance concepts conflict with present legislation and institutions’ environments traditionally operate in.
Decentralized Finance (DeFi) is a new financial system that is trustless, widely accessible, permissionless, and operates without the need for middlemen such as banks. DeFi does this by utilizing Blockchain technology and smart contracts. Due to its comparatively higher security, robust programming language, and large developer environment, most DeFi applications are now developed on the Ethereum blockchain (and its Layer 2 chains). The system decentralizes authority from banks and institutions over money, financial goods, and financial services.
Today, the idea of decentralized finance stands in total opposition to traditional finance, which is highly regulated and controlled by centralized authorities.
Traditional securities exchange operators such as stocks, options, and derivatives, face the existential choice of cooperating or competing with crypto. As a result, exchanges must acknowledge and react to the growing importance of cryptocurrencies while still rejecting the core concept of crypto, which is a decentralized financial system without the need for intermediaries.
While individual governments formulate and enact legislation, there is no global legal framework for cryptocurrency, and because cryptography is a global phenomenon, those restrictions are insufficient.
There are three significant barriers to institutional adoption. They are:
Governments worldwide are split on regulating crypto as it transitions from speculative investment to a balanced portfolio. As cryptocurrency has grown globally, governments have attempted to regulate the industry through traditional methods. Unfortunately, due to the lack of consensus and legislation globally, cryptocurrencies are classified and taxed differently.
Considering bitcoin as an example, the map below breaks down the legal status of bitcoin around the world:
In cryptocurrency, asset custody is a fundamental issue to address. It assists in ensuring that an investment firm’s funds under management are safe and secure for any investor. In addition, investors want to be assured that their funds are accessible throughout and not redundant in a bank account.
In contemporary culture, trust scales poorly, and one of the key goals of crypto assets is to help trust scale up in an ambiguous environment. Furthermore, to function as a payment system, any form of money must be simple to transact with, easily identifiable or verified by users, and convenient to carry.
Unlike conventional banking goods and providers, who have had years to establish how their products and solutions work, the market for digital assets and their custody is still in its early stages. As a result, there are many other options available today, each with its own set of tactics and strategies, especially when it comes to safeguarding assets. A uniform approach to custody should emerge as the market develops, but it will require close coordination between major market stakeholders, regulators, providers, and customers.
Last but equally concerning is the lack of a healthy and efficient trading environment. Apart from the legal framework, this also prevents institutions from entering the market. High spreads, narrow order books, price discrepancy, lack of market stability, and other factors contribute to liquidity fragmentation. As a result, institutions are hesitant to enter the market because they are concerned about a risky trading environment.
FLUID provides a comprehensive one-size-fits-all solution as it combines resources across member exchanges to create an order book to connect institutions and retail investors. FLUID understands the challenges that compliance exchanges and virtual asset regulatory frameworks will bring to the industry. FLUID can help member exchanges adapt to these challenges through KYC and AML standards and “travel rule” compliance with this knowledge. In addition, this allows for efficient access of data, when needed, for all exchange partners.
With FLUID’s innovative technology, multitudinous transactions are settled instantly and simultaneously across all chains, exchanges, and trading pairs using a blockchain-based solution overlaying an MPC wallet architecture. FLUID aims to aggregate liquidity in a unique, innovative, and efficient way to tackle this. In addition, FLUID aims to be a regulated platform that will allow users to trade digital assets in a compliant way.
Korea's premier crypto and blockchain event, Korea Blockchain Week, saw crypto enthusiasts from around the world converge in Seoul for inspirational keynotes, panel discussions, pitch competitions, investor meet-ups, and world-class networking opportunities.
The year 2021 was unquestionably a turning point for the cryptocurrency industry, with Bitcoin repeatedly reaching its record high, albeit with some significant losses. Ethereum, the second-largest cryptocurrency by market capitalization, experienced some of this too, as it climbed to its highest price yet.
The crypto industry is constantly evolving, but there are still some challenges that it has to tackle for institutional adoption. Crypto exchanges do have issues, many of which can ultimately hurt users.
The recent decline in the cryptocurrency market has shocked many, including seasoned professionals. The phrase "DeFi Summer" is developing meaning in 2022, 180 degrees out of sync with the heady times that gave rise to the phrase just two years prior.
This week’s FLUID Live featured FLUID’s CEO and President, Ahmed Ismail, and Head of Marketing and Communication, Matias Jeldrez, who addressed our community’s queries regarding the TGE and FLUID Rewards.
A stablecoin is a cryptocurrency whose value is linked to another asset class, such as a fiat currency or gold, to stabilize its price.
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Liquidity aggregation is not a new concept in the financial industry. On the contrary, it has been used as a solution to tackle fragmented liquidity for many years across conventional financial systems.
Over the last decade, artificial intelligence has snowballed, and no business or industry today is immune to its influence and pervasiveness. This is more evident in the financial services industry, which is constantly evolving and realizing that AI is a transformational technology.
The DeFi industry has the potential to disrupt the TradFi industry by using blockchain-based applications and services to replicate banking, investing, and trading activities. Many TradFi services already have a DeFi counterpart, and more are on the way.
Blockchain-based technologies have surged in popularity over the years. Time and time again, efforts have been made to promote awareness of this relatively new phenomenon. The decentralized finance (DeFi) sector is undeniably thriving, with the total value rising from $700 million in December 2019 to over $200 billion at the beginning of 2022.
The internet that we know today has traversed a long way since its inception. Web1, the first internet, had a physical infrastructure of cables and servers that allowed people and computers to communicate with one another. The ARPANET Network of the United States government sent its first message in 1969, but the web that we know today didn't exist until 1991, HTML and URLs allowed people to browse between sites.
Over the past 48 hours, the FLUID team has been closely monitoring the current climate and the impact FLUID can play in helping to reduce huge volatility in the face of black swan events such as the UST downfall.
FLUID has compiled a list of the most important headlines from the past couple of months, including Kraken's new operating license in Abu Dhabi, Ukraine's cryptocurrency legalization, and New York's two-year crypto mining embargo.
Despite Dubai's popularity as a trading epicenter, the UAE government has sought to transform the city into a global hub for digital asset trading. According to Bloomberg, the Dubai Multi Commodities Centre (DMCC), the UAE's largest deregulation zone, had built up an administrative structure for crypto companies in March 2021 and had already recognized 22 crypto-blockchain entities.
FLUID, the ultra-low latency liquidity aggregator that uses AI quant-based models to tackle inefficient fragmented liquidity in virtual asset markets, has announced it will integrate the LERC20 standard of Lossless to power its $FLD token with hack mitigation capabilities of detecting fraud, freezing fraudulent transactions, and reversing stolen funds.
The term liquidity has various financial meanings that are often used interchangeably and can be very confusing; it could refer to the ease of how an asset is exchanged for another without affecting the market price, how much liquidity a company holds, aggregating liquidity from different sources, or providing access to liquidity.
FLUID LP – FLUID’s DeFi solution – will utilize Polygon as its commit-chain to provide ultra-low transaction fees at speed.
FLUID is a game-changer for the virtual assets industry in liquidity aggregation and provides high throughput, ultra-low latency and costs, and zero counterparty risk through AI quant-based solutions
Counterparty risk refers to the situation where one of the parties of the financial transaction fails to fulfill their commitments. In the traditional market, stocks, bonds, and derivatives carry counterparty risk.
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Trading technologies have evolved significantly over the years. The traditional finance trading technology evolved from a simple electronic order book to an ultra-fast, interconnected, AI-supported unified liquidity, allowing investors and institutions to facilitate advanced trading strategies.
Virtual assets are known for their volatility. Even though the virtual asset market is considered volatile, with the recent digital assets trading and investments boom, many institutional investors seek greater involvement.
As the DeFi industry exceeds growth forecasts, it has now significantly attracted more interest from financial institutions and regulatory bodies.
FLUID is the trading system that consists of an AI-based smart order routing protocol and cross-chain liquidity aggregator enabled by FLUID’s proprietary hedging pool providing high throughput at ultra-low costs, ultra-low latency, and zero counterparty risk.
Most present-day centralized crypto exchange platforms use custodial trading.
Liquidity is the measure of ease to which a cryptocurrency asset can be exchanged/traded into another crypto asset or fiat currency.
Regulation of exchanges and more broadly the infrastructure enabling the trading and exchange exchange of virtual assets has been a widely discussed hot topic that has over 2021 and 2022 graced many government bills.
It’s no secret that the crypto-verse moves at blazing speed with many projects finding success in disrupting the disruptors. So while DeFi protocols like yield farms and DEX’s were at a high last year, the flood of multiple similar platforms have prompted the rise of DEX aggregators like 1inch and 0x.