Liquidity is an important driver in analyzing the efficiency of any market. From stock markets to forex, the easy conversion from fiat to the underlying asset and vice versa keeps attracting the retail and institutional investors. It is true for crypto as well. The introduction of blockchain and distributed ledger was backed with three problems that the native markets were facing including scalability, liquidity and cheap transfers.
In order to gain liquidity, conversions from fiat to cryptos need to be made easier and quicker. Since most of the exchanges do not allow direct deposits and withdrawals in the form of fiat currencies, the introduction of trading pairs and stable coins were introduced. The trading pair allows alternative coins to be launched on the back of ethereum and bitcoin while it also gives an opportunity for investors to stay in stable coins like USDT, TUSD, PAX, and USDC.
The second interesting part of the trading pair is how they are formed. The crypto-backed trading pairs are formed at the time of launch (on the basis of smart contracts like ETH, EOS or NEO) or can be linked at the time of trading with native cryptos (like BTC) or with any stable coins.
Finally, the trading pair improves the liquidity in the exchange, allows traders to gain different incentives on trading competition and makes it quicker for the exchange to utilize its market-making characteristics. Currently, PointPay offers dozens of different trading pairs with various stable coins, which enhances the efficiency of its exchange and attracts a larger pool of audiences.
