Digrate digital assets rating agency has conducted an analysis of the LIQNET – crypto exchange, which combines liquidity from different platforms, forming a single order book with better pricing. The LIQNET project received an A2 rating score based on the results of the examination. Experts see the project’s high potential and medium-to-high probability of long-term investment return.
Currently, the total monthly trading volume of the top-10 exchanges is more than $ 500 billion. Binance is number one in terms of trading volume of $ 130 billion, HitBTC is the 10th with a volume of $ 19.5 billion. LIQNET plans to combine the liquidity of all exchanges for the most profitable trade.
The central element of the exchange and the main competitive advantage of the project is the Liquidity Exchange Network (LEN). LEN combines data on orders from multiple crypto exchanges and forms a single order book.
Using LEN, users will be able to make deals at favorable prices with a minimum spread. The solution is useful, as the existing crypto exchanges do not solve the problem of scattered liquidity between platforms. In the next year, the project team plans to connect top 10-15 exchanges. In the long term, there will be additional connected sources, selected by users’ vote.
The project has limited direct competitition. If we are talking about the classic crypto exchanges, LEN connects to exchanges using their open APIs, and trades through them, increasing the turnover of the exchange and paying it a commission for each transaction.
Forex brokers trading with a BTC-USD pair and other cryptocurrencies are not direct competitors, as they work on non-deliverable CFD contracts for the difference in price, so in case they have to deliver the asset it is difficult and subject to high commissions.
B2BX is the only project that suggested the idea of creating a liquidity aggregator. However, B2BX trades contracts for the difference in prices between BTC and ETH. LIQNET will be the best solution, as uncovered risks need to be closed with a real asset delivery in the market
And yet LIQNET has something to work on. The company does not have money transfer, and fiat operations licenses, and these are one of the most important documents for such kind of projects. The team plans to obtain licenses of the regulators of Japan and Estonia during 2018 In addition to the license, a number of security issues are to be solved. The developers claim that the server part has been successfully tested, but the results of this test have not been presented during the audit. Client’s funds are stored in different places (a geographically spread out array of hot, conditionally hot, and cold wallets and multisig addresses for every cryptocurrency), so they cannot be stolen at one time. Nevertheless, the audit of the smart contract has not yet been conducted.
Full report with an investment evaluation can be found here: https://digrate.com/uploads/ico_report/Liqnet_eng_5BCRC8J.pdf