The Imperatives of IX Swap Liquidity Pool to STO/TSO Industry
The STO market is set to be the next big thing in the crypto space. The market has enormous growth potential but suffers serious setbacks resulting from the lack of liquidity due to strict licensing requirements, government regulations, and a limited supply of automated market makers (AMM).
This publication seeks to explain what liquidity pools are, their growing importance in the STO markets, and most importantly discuss the goal of IX Swap.
What’s Liquidity Pool?
First, we need to understand what liquidity pool is and how security tokens depend on them.
A liquidity Pool is a collection of funds locked in a smart contract. They are funds thrown together in a digital pile in a permission-less environment where anyone can add (liquidity — tokens/coins) to it.
Liquidity pools are used extensively by decentralized exchange (DEX), offering users (known as Liquidity Providers) the platform to add an equal amount of two tokens to create a market and in return are rewarded with trading fees for any transactions that took place in their pool.
Furthermore, liquidity pools are the primary mechanism of a decentralized cryptocurrency exchange (DEX), serving as a substitute for the traditional order books used by centralized exchange (CEX).
On the DEX, there is no order book and no “live” market maker. It makes use of the AMM algorithm, which is an automated market maker protocol that governs the liquidity pool’s operation.
Liquidity Providers (LP) contribution to the pool makes it liquid for those wishing to trade in that pair. Technically speaking, the vault is a smart contract that enables users to securely store their tokens, where traders can have access to the pools funds (tokens) by simply interacting with the Algorithm that governs the pool.
What are Automated Market Makers? / AMM
Automated Market Makers (AMM) facilitate trades efficiently by bridging the gap between buyers and sellers of tokens so that anyone can purchase or sell tokens without having to go through a lot of trouble such as finding someone else who has those tokens wishing to transfer them. Automated market makers earn profit from trading, charging a small fee for each transactions.
Also, AMM enable trading by providing enough liquidity at any point in time to traders.
Moreover, the introduction of Liquidity Pools and Automated Market Makers to DEX has set DeFi at a competitive edge when compared to Traditional Finance(TradFi). Statistics showed that since the advent of liquidity pools and automated market makers, the total monthly
DEX volume increased from $39.5m to $43.5b in a year growing by 110/100%, and this is bound to increase based on the growing adoption of DEX in the crypto space.
This AMM is entirely managed by algorithms that’s secured by a smart contract, thus traders can conveniently interact with the algorithm that governs the liquidity pool.
The pricing algorithm is responsible for adjusting the asset price, as the liquidity pool supports token swaps. The value could be calculated by each liquidity pool using its own methodology.
Regardless of the magnitude of trade, the algorithm ensures that the pool is always liquid.
When it comes to investing and trading in security tokens, one big challenge the industry faces is liquidity and licensing requirements. This is a serious setback to the advancement of this burgeoning industry. The challenges include:
- Lack of Liquidity Pools
- Extremely low liquidity for security token offering (STO) on exchanges and tokenization of stocks.
- Strict licensing requirements among others.
Furthermore, a close look at the total market size of private markets currently
valued at 6.5 trillion higher when compared to the STO market
of 915 million, which only represents 0.014% of the
total market size, showing clear growth potential
for STOs and IX Swap liquidity pools.
To forthrightly confront these challenges and to attract investors into the sector, a more articulated and innovative approach is needed as there are enormous opportunities for growth and development.
IX Swap platform can provide good opportunities for providing services in the field of security tokens and tokenized stocks industry.
The Imperative of IX Swap Liquidity Pool
IX Swap is the first DeFi project found to ensure the steady supply of liquidity to security token and tokenized markets, striving to bridge the gap between DeFi and CeFi.
IX Swap uses blockchain technology to build liquidity and infrastructure solutions for the security token ecosystem, providing global trading and access to this untapped asset class.
Furthermore, IX Swap’s focus is to provide a liquidity pool to tackle the challenge of little or no liquidity for the trading of security tokens and tokenized stocks, allowing anyone and anywhere to participate in the allocation of market-making capital and share the benefits of being a liquidity provider.
Also, courtesy of the IX Swap platform, trading of security tokens has become easier, as STOs will be sold through licensed custodians and security brokers, who in turn will provide the actual ownership and claims on these assets.
Moreover, IX Swap’s team of professionals has extensive experience and expertise in the crypto markets and in the blockchain space to solve the liquidity problem in the security token ecosystem. The team is constantly improving with cutting edge innovation and recently launched STO Swap platform to provide traders and investors with the best service.
IX Swap is poised to take the trading of security tokens and tokenized stocks to an enviable height and be the UniSwap for STO/TSO markets offering you the opportunity to earn passive income by simply offering tokens to the pool.
The aim is to solve the challenge of paucity of funds and licensing requirements faced by traders and to breathe life into the sector by eliminating challenges faced.
Follow the link to learn more about us and the benefits of choosing to become among our liquidity providers and partner.