LockTrip Blockchain | 2. Liquidity
This article is the second part of the LockTrip Blockchain series. Read the first part here.
Liquidity is one of the most important properties of a token (or coin). At the same time, it is one of the hardest to maintain. Good liquidity is only possible if many people are involved and willing to trade.
While in the past few months we have accomplished many steps to increase liquidity, there is still much room for improvement. How will this change with the LockTrip Blockchain?
Securing current Liquidity
First of all, we have to make sure to maintain our current liquidity position. This means, we will need to list our new LOC coin on the exchanges we are currently listed on.
While the related processes could take some time, we will prioritize the most important liquidity sources in order to enable a smooth transition.
Beyond BTC/LOC
Here comes the real opportunity. Have you ever seen an Ethereum based token NOT having a trading pair with ETH? Probably not.
The same will be true for LOC and the tokens built on our blockchain. Every token will have at least one LOC/token pair, if not multiple ones. Similar to the marketing synergies described in the first part of our series, we will experience synergies when it comes to liquidity.
The energy and efforts put into liquidity creation by each project, will at the same time be an investment into the LOC liquidity. Let’s see the effects of this by using the example of Ethereum.
As you can see, there are over 400 trading pairs with ETH that have at least $250,000 of volume each (and 40 above $10M). This results in a daily trading volume of more than $1 Billion in the current bear market and came close to $10 Billion during the bull market we had last year.
However, those volumes are not only generated by token pairs, but also by pairs like BTC/ETH or USDT/ETH. This means, that on top of the direct liquidity synergies arising from each token itself, the LOC coin will get an ambassador status among the market, representing all of the tokens using our blockchain.
Our expectations are thus, that pairs like BTC/LOC will also experience a great boost through the ambassador effect. Investors of LRC20 tokens for example (ERC20 equivalent of our blockchain) might buy LOC with their fiat funds, before exchanging it for their preferred token.
In some cases, they might even be dependent on LOC as the strongest gateway between their token and the rest of the crypto world.
But why does liquidity matter in the first place?
Why Liquidity is important
- Liquidity reduces spreads. The more volume there is, and the more active trading happens, the lower spreads will become due to arbitrage effects and spread traders
- Liquidity reduces manipulation. Bigger volumes and more participants reduce the effects big budget traders can have on the price, effectively protecting against manipulation attempts.
- Liquidity reduces risks. For high budget investors, it is important to know that they can sell their holdings whenever they want, without dumping the price.
- Liquidity reduces volatility. For hoteliers and property owners, volatility will be very important in deciding whether they will hold on to their LOCs or not.
In short, liquidity is one of the most important factors when it comes to the quality of a coin. It adds great value and opens doors for new opportunities.
We envision that through its ambassador role described above, the LOC coin has good chances of becoming one of the hotspots in the crypto industry. More to follow soon.
LockTrip is the first marketplace with 0% commission where you can save on average 20% on your hotel and rental bookings compared to anywhere else. Learn how to buy LOC tokens to enable access to our marketplace and its lower prices here!
