[SC] Increasing exchange liquidity of API3

This thread is an offshoot of the thread on Exchange listings for API3 tokens. The discussions there were moving across two related but different topics - 1. Listing on new Exchanges, 2. Liquidity on current exchanges

@AP13 had a good suggestion, to separate the two and move #2 to a dedicated discussion. Therefore starting it as a thread here, and basis the community’s views we can later graduate it to a specific sentiment check.

Within this topic there are 2 aspects to discuss (community can add more)

  1. Whether we need to increase the liquidity on exchanges where API3 is currently listed

  2. How should this liquidity be sourced / funded

I am pasting below my views on the need to increase liquidity (from the thread on exchange listing). The community could continue discussions this specific topic in this thread

The topic of low liquidity problem has been raised a couple of times, by @AP13 and @UgurMersin , but perhaps been overshadowed by the listing discussion. I was curious to delve a little more into it. Sharing a quick list of what I saw, details are in the later part of this reply (apologies in advance, it will become a long post because of the data). For the comparison I mainly looked at Band as it is in a similar space

  1. API3 has generally been more volatile than Band and Link
  2. API3’s volume is concentrated with few exchanges. Across days I saw >50% daily volume with 1 exchange (OKEx) and >80% with top 4. Coincidentally all 4 are CEXs
  3. API3’s Liquidity appears to be low across marketplaces, incl OKEx
  4. I checked average trade size to see if that is creating price volatility. But API3 actually has a lower average trade size

There can of course be several reasons for this performance, low liquidity being one possibility.

My suggestion: We should first focus on increasing liquidity on exchanges where API3 is already available

How we fund it can also be discussed. The treasury is one option. Another one perhaps is the staked tokens. If we take the later route, only impermanent losses could be compensated, so the inflation through this route will be lower than one with open LP staking rewards.

Will be glad to hear the community’s views

The data

  1. Higher volatility: 1 Jan to 30 Jun, 21 considered, to remove any impact of API3’s staking. Source intotheblock.com

    API3’s price volatility

    Band’s price volatility

 Link's price volatility

  1. & 3. Low liquidity & Sales concentration
    a) We can look at: 1. The depth at 2% / 24 hour trading volume; 2. Liquidity score, 3. Top exchanges, at CoinMarketCap (API3 , Band ). Coingecko’s data is a little different but shows same trend
    b) Exchange-Onchain Market Depth. Source intotheblock.com


  1. Low trade sizes


This is great @Ashish.

The benefits of increased liquidity is obvious and well laid out in the above. Also see relevant posts here. Additional liquidity is more needed than ever due to the launch of API3 staking pool, where the majority of tokens are locked up. So, even the small liquidity we had in the DEXs have dried up.

Methodology for this should be our main discussion:

  1. CEX: Work with existing market makers to provide additional API3 token inventory
  2. CEX: Additional exchange listing
  3. DEX: Use a proportion of 27M API3 tokens that the treasury has but are not allowed to stake. This also helps to generate returns on the idle asset, instead of being diluted with the current regime of high inflation
  4. DEX: Treasury diversification round as suggested by @UgurMersin - [SC-1] - Exchange Listing - #6 by UgurMersin

In terms of feasibility and easy execution, the order is 1, 3, 2 & 4 in my view. This should not be mutually exclusive methods, we should work on all four options when the timing is appropriate based on individual merits.

But as a short term solution with minimal burden to the team and resources, i recommend we take option 1 and work with existing market makers.


Thanks @AP13

Working with market makers is a good idea.

Let’s see what the community thinks and if required, can then upgrade this to a proposal. Or if the API3 team sees merit, they can take it ahead anyways.


Nice analysis so whats next?

1 Like

Apologies, missed replying to your message. I did not see broad consensus around the issue, therefore did not push it ahead.