Ethereum is one of the most popular cryptocurrencies, trailing after Bitcoin. Although it functions as a public ledger that records transactions, Ethereum supports smart contracts. These smart contracts are computer programs that act just like regular contracts but exist on the blockchain.
Smart contracts are programs that deploy automatically once the binding rules are satisfied. So, the ERC-20 is a standard that defines a set of rules on how developers can implement smart contracts during the creation of a token. Some of these rules include the functionalities of the token, how it will be issued and distributed.
The standard allows the created token to interact with other ERC-20 tokens without a glitch. It also enables third-party services like wallets and exchanges to integrate the tokens into their systems with ease. As such, they won’t always have to make an upgrade whenever new tokens are issued.
The ERC-20 Ethereum token standard represents guidelines that a token must follow when implemented on the Ethereum network. In simple terms, it is a list of rules that a token must fulfil to count as an ERC-20 based token. It ensures interoperability among other ERC-20 tokens that run on the Ethereum blockchain and related services like crypto wallets.
Although the term ERC-20 may appear daunting, we will try our best to explain it in clear terms. To properly understand the content of this article, you need a prior understanding of what cryptocurrency entails. You can visit our blog to check our previous posts on Ethereum and how it works.
Tokens are digital assets with value and can be exchanged, sent or received. ERC-20 tokens are similar to Bitcoin or Litecoin, and the only difference is that they do not have their native blockchain. Instead, these tokens run on the Ethereum network.
Anyone can create their token on the network through smart contracts. It means there have to be some rules to guide the functioning of the tokens on the ground level to ensure interoperability. As a result, Ethereum developed a universal standard called the ERC-20.
ERC means Ethereum Request for Comments, and the 20 represents the proposal number. The initialism was coined in November 2015 by Fabian Vogelsteller as the standard for token creation on the protocol. The ERC standard is vital because it represents the background for the design and creation of Ethereum-based tokens. As such, it ensures greater compatibility between all related tokens and wallets.
An ERC-20 token is a digital asset that complies with the ERC-20 Ethereum standard for creating tokens. They are simply like any other cryptocurrency except that they run solely on the Ethereum blockchain. Some common ERC-20 tokens include Basic Attention Token (BAT), Maker (MKR), Tether USD (USDT), Uniswap (UNI), Chainlink (LINK) and many more. According to Etherscan, an Ethereum data tool, the list of ERC-20 tokens in existence is north of 400,000.
The ERC-20 standard provides six compulsory rules and three optional ones regarding creating and issuing tokens on the Ethereum platform. It highlights the functions that the smart contract must be able to implement. The mandatory rules are:
totalSupply is a function that states the total number of tokens in supply. Once this limit is attained, the smart contracts cease token creation.
balanceOf outlines how many tokens an address has in its account.
transfer allows a certain quantity of tokens to be deducted from the total supply and transferred to a user’s account.
transferFrom allows one user to transfer tokens to another user.
approve ensures that all tokens are accounted for within the smart contract.
allowance checks if a user has enough tokens to send to another user. The transaction is cancelled if the user has insufficient tokens in their account.
The three optional rules for an ERC-20 token creation are name, symbol, and decimal. You do not have to include them, but they are essential. For example, tokens that are to be used as a currency should be more divisible than those that represent ownership.
Tokens have a wide range of usage, which makes them versatile. Tokens can represent anything of value, such as voting rights, lottery tickets, company shares, rewards in loyalty programs and even currency.
For instance, the native currency for the Bancor protocol is BNT (Bancor Network Token). Bancor is a protocol on the Ethereum blockchain that allows users to swap ERC-20 compatible tokens. ERC-20 standard makes everything simple for developers who might want to launch new DApps.
The ERC-20 represents a dominant channel through which most of the tokens on Ethereum are created. Although it is still the most popular, there are still some shortcomings. Due to these limitations, developers have proposed alternative standards to the ERC-20 standard. For example, the ERC223 aims to solve the approval issues with the ERC-20, and the ERC621 allows users to change the total token supply.
You can swap, send or receive ERC-20 tokens just like any other cryptocurrency on supported platforms. However, you must possess an ERC-20 compliant wallet to store your tokens. Due to the ERC-20 tokens being ubiquitous, many digital wallets support them.
You can use wallets like MetaMask or Trust wallet to swap or store your purchased ERC-20 tokens. Kyrrex platform makes it easy to buy cryptocurrencies and sell cryptocurrencies. Kyrrex also provides an even better way to keep the ERC-20 tokens via its integrated wallet.
Cryptocurrencies have come a long way and have gone farther than imagined. There are now various applications that allow the possibility of several cross-chain operations. Specific protocols have expanded the scope of use of ERC-20 tokens to other platforms. This interoperability has created novel ways for the benefit of crypto.
On September 3, 2023, Kyrrex celebrated an important milestone: our fifth anniversary. Five years in the dynamic world of cryptocurrency is an achievement that evokes a deep sense of pride. This date holds great importance to us. Over these years, we’ve been deeply committed to our mission, continually iterating and improving for the community.
Throughout this journey, we have strived to develop and introduce features that serve the evolving needs of our users. We have empowered businesses, providing them with the tools they need to launch and operate seamlessly in the crypto space. The introduction of the liquidity hub has ensured that trades are executed with speed and efficiency, creating a reliable trading environment.
Kyrrex's cooperation with the world of sports is a testament to our commitment to excellence. Among our respected ambassadors, we are honored to count elite athletes such as Jorge Martín from MotoGP, Martín Di Nenno, a padel top player, and others. This collaboration is deeply symbolic. These athletes, who stand at the peak of their sports, mirror our relentless passion for perfection.
We also have been part of history, observing meteoric rises in the value of Bitcoin and other cryptocurrencies, navigating through moments of market turbulence, and witnessing the inception and demise of various startups and billion-dollar projects.
As we move forward, our vision for Kyrrex is crystal clear. The roadmap ahead is filled with ambitious plans, from expanding into new markets and acquiring more licenses to introducing more innovative trading projects. Each of these milestones will be realized thanks to the dedication of every team member. Special acknowledgment goes to our CEO, Kevin Plumpton, and the co-founders, Mykhailo Romanenko and Viktor Kochetov, whose leadership and vision guide our journey.
As we turn the page and step into a new chapter of Kyrrex’s story, we begin a fresh countdown, setting our sights on greater horizons.
Here's to the next chapter, to innovation, and to continued success!
Have you ever wondered what makes crypto trading tick? It’s all about liquidity! In this blog post, we will delve into the importance of liquidity in crypto trading and how it compares to traditional finance. Get ready to unlock the secrets of this vital aspect of the trading world.
As in traditional financial markets, liquidity in crypto trading refers to the ease of buying or selling digital assets without significantly affecting their price. The concept of liquidity is crucial for the smooth operation of any market, be it the stock market or the cryptocurrency market. Factors such as market depth and bid-ask spread influence cryptocurrency liquidity, just as they do in stock markets.
A deep market with ample liquidity indicates a healthy market, allowing efficient trading and accurate price discovery. Conversely, low liquidity can pose challenges, such as increased slippage and price volatility, which can discourage investors and hinder market stability.
Market depth refers to the number of buy and sell orders available at different price levels, with higher depth indicating greater liquidity. Increased market depth is indicative of increased liquidity, as it suggests a higher level of trading activity and a more liquid market.
In other words, the more buy and sell orders that exist on the market, the easier it is for traders to execute their transactions efficiently without causing significant price fluctuations.
The bid-ask spread is another crucial indicator of market liquidity in crypto trading. It represents the gap between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for a given digital asset. A narrower spread is indicative of increased liquidity, as it reflects a higher presence of buyers and sellers in the market.
A tighter spread facilitates faster and more efficient trading of assets at fair prices, ensuring that all market participants can execute their transactions without significant delays or price fluctuations.
Cryptocurrency liquidity is influenced by various factors, including trading volume, market makers, and the regulatory environment. Understanding these factors is essential for traders and investors who wish to make well-informed decisions and navigate the often volatile crypto market with confidence.
Let’s take a closer look at each of these factors and how they impact liquidity in the crypto market.
Trading volume is the amount of assets traded within a specific period of time, with greater volume indicating a higher level of liquidity. Increased trading volume implies heightened trading activity, which in turn suggests a more liquid market.
Identifying digital assets with high trading volume is one way to spot cryptocurrencies with high liquidity, as a large investor base and high trading activity are indicative of increased liquidity.
Market makers play a vital role in providing liquidity in crypto trading. These entities, which can include large banks, brokers, or hedge funds, place buy and sell orders in the market, thus ensuring sufficient liquidity to facilitate efficient trading and maintain price stability.
Market makers continuously quote bid-ask asset prices to keep the spreads within a certain range, making a profit from the bid-ask spread difference. By providing liquidity, market makers contribute to reduced slippage, improved price discovery, and enhanced market efficiency.
The regulatory environment surrounding crypto trading can also have a significant impact on liquidity. Some ways in which regulations can affect liquidity include:
A favorable regulatory environment can encourage participation in the market, thereby increasing liquidity, while stringent regulations can discourage participation and lead to reduced liquidity.
Liquidity providers play a crucial role in the crypto trading ecosystem by ensuring the availability of assets for trading and maintaining stable prices. These entities help to create a more efficient market, allowing traders and investors to execute their transactions without significant delays or price fluctuations.
Let’s explore the different types of liquidity providers and the incentives that encourage them to provide liquidity to the market.
In the crypto trading space, liquidity providers can be:
An example of a centralized exchange liquidity provider is Kyrrex Liquidity Hub which provides improved and centralized liquidity with seamless transaction matching, and a wide variety of cryptocurrencies to exchanges and other crypto platforms. Its features include effortless crypto asset matching, sufficient order book liquidity, high-speed processing, minimized commission costs, and secure custodial storage for clients' funds. Liquidity through the Hub can be deployed directly or through other modes including market maker.
Automated market makers are computer programs that utilize algorithms to facilitate the matching of buyers and sellers, contributing to the overall liquidity of the market.
Liquidity providers can benefit from various incentives in the crypto trading ecosystem. For instance, they can earn transaction fees and token rewards for providing liquidity to trading pairs on exchanges. Additionally, liquidity providers may take advantage of yield farming incentives, which involve providing liquidity to a decentralized exchange or liquidity pool and receiving a share of the pool’s trading fees or rewards in return.
These incentives help to attract and retain liquidity providers, ensuring a stable and efficient market for all participants.
High liquidity in crypto trading offers several advantages for traders and investors alike. With ample liquidity, market participants can enjoy reduced slippage, better price discovery, and increased market efficiency, which are essential for smooth and profitable trading.
In the following sections, we will delve into each of these benefits and discuss their implications for the crypto market.
Reduced slippage is one of the key benefits of high liquidity in crypto trading. With more buyers and sellers in the market, large orders can be executed without significantly impacting the asset’s price, leading to more favorable execution prices for traders.
This is particularly important for investors with sizable positions, as it allows them to enter or exit the market with minimal price impact, thereby maximizing their potential returns.
High liquidity also leads to better price discovery, ensuring that assets are traded at fair market value and preventing potential price manipulation. In a highly liquid market, the presence of more buyers and sellers helps to establish an accurate price for each asset based on market activity.
This is essential for a stable and efficient market, as it allows traders and investors to execute their transactions at prices that accurately reflect the true value of the underlying assets.
Lastly, high liquidity contributes to increased market efficiency, allowing for:
This creates a more favorable trading atmosphere for all market participants.
While high liquidity offers numerous benefits, low liquidity in crypto trading can pose several challenges. These challenges include increased slippage, price volatility, and limited trading opportunities, which can discourage new investors from entering the market and hinder overall market stability.
Let’s take a closer look at each of these challenges and their implications for the crypto trading landscape.
Increased slippage is a common challenge in low-liquidity crypto trading environments. As fewer buyers and sellers are available on the market, large orders can have a significant impact on the asset’s price, resulting in unfavorable execution prices for traders.
This can be particularly detrimental for investors with large positions, as it can erode their potential returns and increase their exposure to market risk.
Low liquidity can also lead to price volatility, as sudden price swings can occur due to low trading volume. Price volatility can be both a blessing and a curse for traders, as it offers potential profit opportunities but also introduces the risk of unpredictable price shifts.
In a low-liquidity market, price volatility can be exacerbated, making it more challenging for traders and investors to navigate the market and execute their transactions with confidence.
Finally, limited trading opportunities can arise from low liquidity in the crypto market. With fewer buyers and sellers available, it can be difficult for traders to find suitable trading opportunities that align with their strategies and risk tolerance.
This can discourage new investors from entering the market and potentially hinder overall market growth and stability.
Crypto trading liquidity shares both similarities and differences with traditional finance, such as stock and forex markets. While both markets rely on liquidity for smooth transactions, price discovery, and market stability, the decentralized nature of crypto markets, the role of liquidity providers, and the impact of regulatory environments set them apart.
Let’s explore these similarities and differences in more detail.
One of the key similarities between crypto trading liquidity and traditional finance is the importance of liquidity for efficient transactions, price determination, and market stability. Both markets, including fiat currencies, operate on the principle of supply and demand, with buyers and sellers interacting to establish the fair market value of assets.
Additionally, both markets experience risks and volatility associated with trading, as well as comparable transaction experiences and user interfaces.
The main difference between crypto trading liquidity and traditional finance lies in the decentralized nature of crypto markets. Unlike traditional finance, crypto markets operate without a central authority or intermediary, relying on a network of interconnected computers to facilitate trading and secure transactions.
Additionally, the role of liquidity providers in crypto trading differs from their role in traditional finance, with liquidity providers in the crypto space including centralized exchanges, decentralized exchanges, and automated market makers.
Lastly, the regulatory environment surrounding crypto trading can have a significant impact on liquidity, with regulations in various countries affecting the availability of assets for trading, as well as the cost and speed of trade execution.
In conclusion, liquidity is a vital aspect of the crypto trading ecosystem, with high liquidity offering numerous benefits such as reduced slippage, better price discovery, and increased market efficiency. Understanding the factors affecting cryptocurrency liquidity, as well as the role of liquidity providers and the similarities and differences between crypto trading liquidity and traditional finance, is crucial for traders and investors looking to navigate the ever-evolving world of digital assets. With this knowledge in hand, you’re now better equipped to make well-informed decisions and capitalize on the exciting opportunities that crypto trading has to offer.
High liquidity in crypto is generally seen as a good sign as it indicates a deep and stable market with low price changes. It also makes it easier to buy and sell digital assets at reasonable prices without having to worry about liquidity issues.
Liquidity in cryptocurrency markets is achieved through the use of order books and market participation. Liquidity pools act as a reserve for digital assets, providing liquidity to speed up transactions for decentralized exchanges (DEX).
Liquidity also refers to the ease with which tokens can be swapped or converted into fiat currencies.
Cryptocurrency liquidity is heavily influenced by trading volume, the presence of market makers and applicable regulations.
Market makers are entities that provide liquidity to the market by placing buy and sell orders. They are usually large financial institutions or professional traders. Regulations can also affect liquidity, as certain jurisdictions may also affect liquidity.
Crypto trading liquidity is different from traditional finance in that it is decentralized, involves liquidity providers, and is subject to varying regulatory environments.
These differences can have a significant impact on the trading experience, from the types of assets available to the speed of transactions. For example, decentralized exchanges are often faster and more secure than centralized exchanges, but they may not offer the same features as centralized exchanges.
Kyrrex keeps pushing boundaries to provide its users with an innovative and comprehensive cryptocurrency trading experience. Recently, we delighted our customers by introducing NEAR and ALGO. Today, we're thrilled to announce another significant addition to our platform – Cardano (ADA).
Cardano is not your average cryptocurrency. Launched in 2017 by Ethereum co-founder Charles Hoskinson, Cardano distinguishes itself from the pack with a unique focus on scientific philosophy and a research-driven approach.
Perhaps one of the most interesting aspects of Cardano is its dual-layer architecture. This structure separates the ledger of account values from the reason why values are moved from one account to the other. This distinction leads to greater security, flexibility, and scalability, making Cardano a promising addition to our platform.
With a market capitalization of approximately $10 billion, Cardano holds a significant position in the cryptocurrency landscape. Of the total supply of 45 billion ADA, around 35 billion are currently in circulation.
As a Kyrrex user, you now have the opportunity to deposit, withdraw, and trade ADA coins directly from your Kyrrex account. Moreover, we're launching the ADA-USDT trading pair, allowing you to effortlessly trade between Cardano and Tether, based on market trends and your personal trading strategy.
To interact with this asset, simply go to your personal Dashboard and select the desired function, such as trading, exchanging, depositing, sending, or storing in the Kyrrex wallet. If you haven't done so already, please register and verify your profile.
While we're excited about adding Cardano, it's just one of many recent developments at Kyrrex. We've successfully undergone another ISO certification, further reinforcing our commitment to security and best business practices. Our ambassadors have recently brought home significant victories at the MotoGP/Moto2 Grand Prix in Germany and Italy. Simultaneously, our ambassadors shone at the World Padel Tour, bringing the Kyrrex brand to the forefront of the sports world.
Looking ahead, we're excited about what the future holds for Kyrrex. We'll continue to expand and refine our platform, incorporating the most innovative and exciting cryptocurrencies and features to provide you with an unparalleled trading experience.
Stay tuned for more updates!