Binance CEO Warns Against Countries Having Separate Orderbooks
Summary:
- According to Changpeng Zhao, commonly known as CZ, some countries want orderbooks to be separated among individual countries.
- CZ warns that such a move adversely affects the crypto market liquidity.
- He also points out that if such a scenario plays out, large traders will have an easier time manipulating the markets.
- He explains that one global orderbook offers larger liquidity, better prices, lower slippage, and the best consumer protection against market manipulation.
Binance CEO, Changpeng Zhao, A.K.A CZ, has revealed via Twitter that some countries have requested segregated orderbooks separating market orders along individual countries.
Segregated Orderbooks are a Bad Idea — CZ.
According to CZ, separating orderbooks along individual countries ‘is a bad idea.’ He explains that dividing up the orderbook in such a manner would adversely affect the crypto market liquidity.
To begin with, he gave the hypothetical example of 180 countries having their individual orderbooks. Such a scenario would mean that the crypto market liquidity would be divided into 180 parts, thus making it 180 times easier for large traders ‘to swing the markets’ thus increasing market volatility.
Secondly, even if arbitrage traders tried to bring the prices back to balance, it would be a daunting task that only a unified global orderbook can solve.
A Global Crypto Market Orderbook Provides the Best Consumer Protection Against Market Manipulation — CZ.
CZ concluded his analysis of the potential drawbacks of dividing up the crypto market orderbook by highlighting the benefits of a unified global one.
He explained that such an orderbook provides large liquidity, better prices, and a tighter spread for crypto traders. Such benefits are significant for consumer protection against market manipulation. He said:
“Large liquidity is one of the best Consumer Protection mechanisms. It protects against market manipulation, volatility, and reduces liquidations.”
Binance Continues to Offer the Largest Liquidity Globally.
To note is that Binance is by far the largest crypto exchange in terms of daily trade volume and average liquidity. At the time of writing, Binance is ranked first on Coinmarketcap.com with a daily trade volume of $15.2 billion. The exchange also has an estimated 20.96 million weekly visits and 1,684 unique markets.
FTX is a distant second with $1.553 billion in daily trade volume, 4.775 million weekly visits, and 420 unique markets.
~ By John P Njui ~
