As market liquidity gets deeper, markets become more efficient, market confidence grow, spreads become tighter. The opposite is true when liquidity in a market wanes, it becomes harder to offload assets which has a negative impact on pricing and therefore market confidence. It is true to say that liquidity is the lifeblood of our wider crypto ecosystem and one which will influence institutional adoption of everything from NFTs to BTC. No liquidity means that these assets will have a short lifespan.

But despite crypto assets commanding a market cap in the trillions and supposed trading volumes of hundreds of billions daily, there is a consensus amongst institutional players that liquidity is deeply fragmented with many “tier-2” exchanges, OTC desks and VCs having to rely mainly on “dark pools” of liquidity which are highly unregulated, highly opaque and carry significant counterparty risks.

The growing regulatory scrutiny (which we at FLUID strongly support) means that centralized exchanges (CEXs) are bringing about a new dawn of decentralized exchanges (DEXs). Despite their surging popularity, they are stlll new and face liquidity issues preventing them from being used by institutional investors.

FLUID is trying to solve this $19 trillion dollar problem byintroducing institutional cross-chain liquidity aggregation to the digital asset space with zero cost and counterparty risk.

Why is Liquidity so important?

1) Deep liquidity helps maintain price stability

When a market is crowded with illiquid assets, the price swings are more frequent and violent. Sometimes it’s because powerful but unscrupulous parties manipulate prices in their favor against retail investors and traders.

2) Large numbers of investors keep markets efficient because of high trading activities

In a highly liquid and free market, setting prices forces both buyers and sellers to compete against one another to achieve their aims. This equilibrium ensures prices stay at fair rates, keeping the market stable for the participants involved.

Liquidity issues affecting decentralized exchanges

Supply and demand

Supply and demand2

If a significant event like China’s regulatory ban on virtual currency occurs, crypto investors will rush to sell their assets to prevent losses and protect their portfolios.

A reduction in demand causes the asset to become less liquid.

The same effects apply on the supply side as well.

The number of DEX users is on the rise but still substantially below their CEX counterparts. This results in lower supply and demand, which causes liquidity to suffer for these platforms.


Important to note – this issue doesn’t affect everyone in the same measure.

Some countries have in place oppressive laws and regulations that threaten to impact the geography’s crypto liquidity.

Establishing resistance towards cryptocurrency trading in those countries impairs liquidity but raises prices and increases the prevalence of fraud.

The biggest hurdles DEXs need to overcome

Cryptocurrencies are still associated in the minds of certain individuals with a negative connotations including money laundering exploits, and hacks. This has led many people to view cryptocurrencies unfavorably despite their benefits for society as consumers who want more control over their wealth instead of being tied down by banks or governments.

Fortunately, as the number of decentralized initiatives surges, so does global awareness – contributing to elevated levels of adoption.

Other issues DeFi and decentralized exchanges would need to overcome include:

1. Energy consumption costs

2. Market immaturity

3. Security and regulatory challenges

4. Lack of stability

5. Lack of interoperability

Introducing FLUID: An institutional cross-chain liquidity aggregator

DEXs are flawed on the subject of liquidity because their fragmented ecosystem hasn’t solved the consistent issues related to liquidity.

The biggest issue with DEX aggregators is many are limited to just connecting Ethereum liquidity pools. This constrains the extent of multi-chain accessibility for DEX trading.

A cross-chain liquidity aggregator, FLUID aims to solve this issue by introducing cross-chain liquidity into the exchanges with no counterparty risk, essentially pooling sporadic liquidity onto a single platform.

FLUID incorporates an institutional cross-chain liquidity aggregator to provide a solution to the DEX issues. Complex algorithms are tasked with finding the best routes to fulfill trade orders across different networks to alleviate any liquidity issues for institutional investors.

This is achieved by aggregating resources from different DEXs across different chains into a larger pool to access. The goal is to provide high throughput and cross-chain liquidity to rescind transactional issues between different DEXs.

A liquidity example of a four cross-chain pool can be, for instance:

BTC pool⇒ ERC20⇒ USD⇒ Polygon

Liquidity is the lifeblood for crypto

DEXs will play a significant role in the financial economy of the future.

The first step was eliminating order books and replacing them with liquidity pools. Automated market makers were able to pioneer a dynamic shift in the DeFi market.

With cryptocurrency slowly evolving into a formidable investment platform, so will the need for steady liquidity in DeFi. FLUID introduces a powerful decentralized liquidity solution ensuring sustained institutional adoption of digital assets.

About Fluid

FLUID is an institutional smart order routing engine and liquidity aggregator that brings high-throughput and cross-chain liquidity to the digital asset exchange space at zero cost and no counterparty risk. With every asset aimed to be tokenized in the future, FLUID is positioned to capitalize on penetrating cross markets, including spot, futures, derivatives, synthetics, STOs, and tokenized assets to provide the railways with interoperable liquidity markets.

FLUID is backed by a professional team consisting of ex Bankers of Bank of America, Merrill Lynch, Goldman Sachs, BNY Mellon, Citibank, Visa, and founders of leading regulated digital asset OTC trading desks, quantitative firms, and popular blockchain companies.