Despite a growing demand for a unified, liquid, global crypto market, cyber currency markets remain fragmented because of the newness of the space, regulations and technology. That will begin to change this year.
At the dawn of 2018, there were more than 120 cryptocurrency exchanges globally facilitating the trading of more than 1,000 individual markets. Daily trading volume for cryptocurrencies is now over USD $20 billion and the total market cap is over $700 billion. This vertical is expected to expand to $1-2 trillion this year, with trading volume reaching $50 billion or more.
For this reason, asset managers are beginning to see increased demand for cryptocurrency exposure in their portfolios.
There is also another reason. Large spreads are common between exchanges on the same crypto pairs, creating ample arbitrage opportunities for crypto traders that do not exist for more efficient markets.
For example, bitcoin prices in South Korea are about 43% higher than those in the United States (what is being called the “Kimchi Premium”.) Why not buy in the U.S., sell in Korea and pocket the difference, risk-free (minus transaction costs)?
But it’s not that easy. Here or anywhere else. And for a variety of reasons and problems that are common to this kind of trading. Arbitrage in the crypto space is still in its infancy. National regulations on cyber currency differ widely. The technical ecosystem is fragmented. Exchanges have a patchwork of liquidity that is far from consistent. KYC policies are all over the map. Trading in an automated fashion requires the use of multiple accounts across exchanges. The costs and time it takes to convert fiat currency to cyber, and then crypto to crypto are prohibitive. Execution fees also remain high. Typical exchange commissions run between 0.1%-0.25% per transaction (which is between 10-15 basis points).
Nothing is automated, in other words. Much less connected. Most exchanges are also still unregulated. And everything is difficult, complicated, time-consuming, and expensive.
XTrade plans to change all that. The company is launching three separate products in sequential stages to create consolidated access to disparate markets and exchanges. The products are intended to help traders overcome the multiple challenges that hinder international, multi-exchange trade. These problems include low market liquidity, unfamiliar and hard to navigate interfaces that lag behind industry standards and decentralized execution in cryptocurrency.
The company aims to become the de-facto US-based technology platform for large financial entities to enter the global crypto market – across global exchanges.
The company will generate revenue via execution fees, market data sales, software licensing and other revenue streams. The operational fund for creating the platform and creating the interoperability to execute across multiple exchanges will be raised via the token sale.
Trading fees will be facilitated by the system token – the XTRD – an ERC20 utility token.
The challenge facing Xtrade is large, but the company already has a plan and a roadmap. The company will roll out three distinct services sequentially which will work together to create the unified vision the company hopes to achieve.
Stage 1 – Implementation of a Multi-Exchange FIX API
The Financial Information eXchange (or FIX) protocol was created in 1992 to create a “universal” communication language for international financial transactions. It is, in other words, the standard means of communication for trading in global equity markets. It works by defining preset “tags” as value placeholders. Orders are then entered by defining variables in the tags.
There is currently no such system for cryptocurrency – each exchange has its own communication standard (although these too are not all proprietary). Because there is no FIX interface, there is no standard communication between exchanges. This means that traders cannot easily access multiple exchanges.
Xtrade is planning on launching a universal, low latency FIX-based API to connect existing and future exchanges. This, in turn, will encourage the participation of larger institutional financial companies, hedge funds and algorithmic traders to access global crypto markets by coding to just one FIX application – and further one they are already familiar with.
In essence, this API is a communications bridge which allows market participants to easily add multi-exchange executions to their existing transaction systems. Xtrade hopes this product will also jumpstart universal crypto trading adoption in the institutional sector.
Step 2 – Launching The Xtrade Pro Trading Platform
Most professional traders and other finance professionals do not use web-based trading platforms. Instead, they use robust, standalone, downloadable applications that allow for fast order entry, immediate execution, advanced charting and custom order types.
There is no such tool for the crypto market. Those aggregation platforms that do exist are web-based, lack low latency, suffer from security issues, and have functionality far below what professional users are used to and demand.
Xtrade will launch Xtrade Pro this year to solve exactly this problem. The platform, which will have 24/7 uptime, will also include advanced consolidated order books, hotkey order entry and custom order types.
Step 3 – Single Point of Access, Liquidity Aggregation and Cross Exchange Execution
Xtrade creates a single unified point of access across exchanges. This not only means that traders have the ability to access and aggregate their assets. It also allows traders to clear at the best possible prices while incurring the lowest possible transaction costs. The SPA also gives traders the ability to perform so-called “atomic” swaps – or the ability to instantly swap one cryptocurrency for another.
The Xtrade SPA will be facilitated via joint venture partnerships with existing exchanges to minimize regulatory hurdles. Xtrade is only the tech provider that allows balance clearance from its inventory accounts to be able to close trades by clients within the joint venture exchange. To that end, Xtrade has already secured a partnership with a major exchange that facilitates trading in primary currencies now and will be adding ERC20 token capability shortly.
Token name: XTRD
Token base: ERC-20
Token Sale dates: Presale started February 10, 2018 (accredited investors only)
Token sale target: USD $45 million
Token price: USD $ 0.10 per token
Minimum investment: 10 ETH