Why Liquidity Is Essential To A Functioning Marketplace

Have you ever tried to sell a given commodity and there is nobody willing to buy from you? Or searching for a product to buy, but no one is selling? That is the difference that liquidity or the lack thereof can make in any marketplace.

What is Liquidity?

Simply put, the presence of liquidity could represent an abundance in availability. It can also be described as a constant flow of a given commodity that satisfies the demand thereof at any given time.

The two basic factors that qualify a marketplace are the elements of supply and demand. It is the balance of these two factors that determine the price and conditions of the products or commodities that are traded in any given marketplace.

The cryptocurrency market is littered with numerous numbers of tokens which are all at different stages in their developmental cycles. Beyond the underlying technology of any given token, the readiness of its availability in the open market goes a long way to determine the level of adoption that it enjoys.

Various projects adopt different processes to encourage liquidity for their tokens, especially after listing on platforms where they become tradable. Some employ the services of market makers, who place huge market orders on both sides to accommodate the smaller orders of independent traders.

Airdrops and bounty distributions have also been employed by many projects to encourage the circulation of their project tokens. This is besides the token sales that have become typical of most emerging projects.

No matter the approach, liquidity remains an essential aspect that measures how well a marketplace is performing.

How to Provide Liquidity

Vertex.Market, having realised the importance of this singular element has created an Over The Counter (OTC) platform where liquidity is a primary focus. The platform offers users the opportunity to purchase any token of their choice using bank transfers without limits.

This is a convenient gateway that gives traders and investors an opportunity to enter the cryptocurrency marketplace through a secondary market.

Besides the already established tokens and cryptocurrencies, Vertex.Market embarks on a regular research to identify yet to be listed tokens that have promising market potential. These tokens are made available to customers at their present stages, ahead of listing, giving its customers an edge before hand.

Ecosystems like the cryptocurrency markets are measured by the vibrancy of their exhibition. This is highly dependent on the extent of liquidity that is present in the market.

A stalling market is usually considered to be illiquid, and represent a lack of opportunities for participants. Therefore, for any market to be considered healthy and worthy of participation, it must possess a considerable level of liquidity.