necessary DEFI heroes: Cryptocurrency liquidity suppliers
As the world increases and evolutions, decentralized finances (DEFI), a new class of players has appeared that have a significant impact on the ecosystem. They are not only people or small businesses, but rather institutional entities that provide liquidity with one of the biggest names of def.
But who exactly are the liquidity suppliers of cryptocurrency? And why are they so important?
** What is a liquidity supplier?
The liquidity supplier is an entity that agrees to store and manage a certain number of digital assets, such as cryptocurrency or tokens, on behalf of or other users. In exchange for this service, the supplier receives a fee in exchange for providing liquidity on the market.
In DEFs, liquidity suppliers play a key role in the stabilization and regulation of the prices of various assets. Acting as a medium between buyers and sellers, they allow more stable and efficient prices, which is necessary for the functioning and liquid market.
** Why are liquidity suppliers important?
Liquidity suppliers are crucial for several reasons:
- price stability : providing liquidity on the market, they help ensure that prices remain stable and predictable.
- market performance
: liquidity suppliers allow faster and more efficient discovery of prices, which is necessary for the functioning market.
- Risk management : help to reduce risk by acting as a contractor to other positions on the market.
** Who are liquidity suppliers?
Fleal suppliers come from around the world, with some significant examples, including:
- Kraken : The leading exchange of cryptocurrencies, which has established cooperation with several major DEFI protocols.
- Bitfinex : Popular cryptocurrency trade platform that provides liquidity to a wide range of markets.
- Binance : One of the largest exchanges of cryptocurrencies in the world, which also invested heavy DEFI initiatives.
How do they work?
Liquidity suppliers use variable techniques for managing their assets and ensuring liquidity to users, including:
- Strike : They study some of their assets to get interest or prizes.
- Sales
: They sell their assets on behalf of other users to raise funds for commercial activities.
- PULE : They form pools with other investors to manage larger amounts of assets.
Benefits of working with liquidity suppliers
Cooperation with liquidity suppliers can provide several benefits, including:
1.
- Reduced risk : liquidity suppliers have lower capital requirements than traditional market manufacturers that you can reduce your own risk.
- improved performance : can help improve trade processes and improve overall performance.
Application
Liquidity suppliers are unknown DEFI heroes, providing key support for the ecosystem and enabling a more efficient and stable market. Although they can not always recognize this, their contribution is necessary for the growth and success of DEFI initiatives. As the space evolutions, we can expect even greater innovation from players’ players.
Sources:
- “What is a liquidity supplier?” By Cryptoslate
- “The role of liquidity suppliers in DEFI” by Cindesk
- “Liquidity suppliers: The Unsung Heroes of Defi” by Coindyk
