8 ways crypto exchanges can help address liquidity concerns

cointelegraph.com:

Globally, the young crypto industry struggles with image issues. The latest blow came in May 2023, when the U.K.’s Treasury Committee recommended that crypto trading and investment be regulated as gambling rather than as a financial service. 

Setting aside the fairness or accuracy of the opinions of regulatory agencies and crypto-skeptical investors, it’s clear that the industry must take every possible step to earn the trust of outsiders. This includes the need for crypto exchanges to address liquidity concerns — not only to enhance exchanges’ trustworthiness and credibility, but also to provide a stable and seamless trading experience for users. Below, eight members of Cointelegraph Innovation Circle suggest strategies to help crypto exchanges calm investors’ concerns about liquidity.

The benefit of liquidity mining — as opposed to working with liquidity providers — is that the process is decentralized and doesn’t rely on third parties. There are risks associated with liquidity mining, so exchanges should be careful in adopting this approach. – Anthony Georgiades, Pastel Network

In an industry predicated on trust, it’s critical to provide access to products and services when users need them most. However, part of that infrastructure is building a reserve of vetted fiat-to-crypto and crypto-to-crypto pairs that ensure greater movement through the space. This helps encourage ample liquidity pools that, like a river powering a mill, keep the engines of an exchange running. – Oleksandr Lutskevych, CEX.IO

One way that crypto exchanges can help address liquidity concerns is by implementing market-making programs. These programs involve incentivizing third-party market makers to provide liquidity by offering them rebates on