Necessary Exchange Innovations

Necessary Crypto Exchange Innovations
Crypto exchanges come in a variety of fashions. Some have a lot of real trading volume and a good interface, some offer FIAT gateways but because of that enforce KYC, while others are completely automated and provide users with a private key to their personal exchange address. Despite of this variety of already existing exchanges, I see much room for improvement and for new features on crypto exchanges. In this article, I will cover 4 areas, where I want to see innovations on and around crypto exchanges in 2019.

Rank exchanges by orderbook depth
First and foremost, I want sites like CoinMarketCap, Coingecko or Coinlib to improve their exchange rankings. So many exchanges with a small number of users try to create awareness for their exchange by boosting their position in these rankings with fake volume. Volume doesn’t accurately display, whether an exchange is liquid or not. As a substitute metric, I plead to rank exchanges by orderbook depth, which could be described by units of a particular cryptocurrency, that can be sold per market order without hitting buy orders 1% below the current market price (read more information on that in this article). An alternative way to compare crypto exchanges will most likely put an end to the growing number of wash trading exchanges.

Advanced trading features
Occasionally, I like to do a trade based on technical analysis. Whether that is buying, because the RSI went below 10 on a specific timeframe or selling because the price went below certain moving averages doesn’t matter – if I want to execute a trade based on TA I have to do it manually, despite all the information needed for that is already included on the exchange. Let’s say I want to sell the coins I hold on an exchange once the RSI reaches a price above 90 in the 5-minute chart and buy them back once the RSI reaches a value of 70 again. To do that, I literally have to look at the chart and then press a button by hand, if the chart on the exchange hits my sell/buy condition. Sure, I could build a trading bot that acts exactly on that condition, but that’s not user-friendly at all. In 2019, I want to see exchanges innovating in that area. Instead of just providing buy/sell orders based on a price point, I want to see them provide the possibility to link a buy/sell order to a condition.

Concatenation of trades
While we are speaking of single trades linked to a condition, why isn’t it still not possible to concatenate several different trades? Let’s say I want to sell an altcoin, that is only traded against BTC at a certain price point and then switch the received BTC to Fiat or a stablecoin. Again, I have to do that manually by pressing a button based on information already included in the exchange. Something like “if the prior placed trade to BTC is executed, sell all BTC to this stablecoin at this price” would be very helpful and much appreciated, given how many coins are not paired to Fiat or stablecoins.

Trades on the blockchain
One of the main purposes of the whole crypto movement is to eliminate the need of trusting a centralized third-party, by recording everything on a decentralized public blockchain. Ironically enough, 99.9% of all cryptocurrency trades are recorded in centralized databases of cryptocurrency exchanges. Even so-called “decentralized” exchanges like IDEX or Etherdelta execute all their trades in a centralized environment. However, recording trades on a public blockchain would enhance trust towards exchanges, since source, destination and date of all trades would be completely transparent. Therefore, another feature that I would like to see implemented by exchanges in 2019, would be to record trades on a public blockchain.

This article discussed 4 innovations needed on and around crypto exchanges. At first, orderbook depth was named to substitute trading volume as a method to rank and compare liquidity on crypto exchanges. Exchanges itself should introduce more advanced buy/sell orders, that can be based on conditions, such as RSI or moving average values. New features to concatenate trades would also be much appreciated, so that you can automatically convert the amount of BTC, that you received from an altcoin trade, into a stablecoin or FIAT. Adding to these features, trust in exchanges would increase by making trades more transparent and recording them on a publicly accessible blockchain.