Decentralized Exchange AirSwap Set to Attract Institutional Investors with their OTC Block Trading
AirSwap Brings In New Tools to Appeal to Institutional Investors with their OTC Block Trading
The AirSwap decentralized exchange has been working on establishing tools on their database that will appeal institutional investors. They plan to roll out the ability to use Ethereum tokens on the platform, but their most recent development is to launch the necessary framework for over-the-counter (OTC) block trading.
Most users already on the AirSwap platform have already expressed their plan to purchase and sell off tokens. However, one of the new tools being added to the platform is a chat feature, connecting traders with buyers on a private conversation where they can negotiate the terms of a trade, if desired. Most larger investors prefer to have this type of interaction, because it does not require them to broadcast a negotiation that could move the market .
An identification system has been established in the interface, which is run by Wyre as a third-party service. Wyre is a regulated money services business (MSB). As a result, broker-dealers and other institutional investors will be able to have access to regulations that help them have more security in their trading. With all of these features combined, there should be little to worry about for DEX institutional investors, which means that the market should see an influx of new capital for the crypto industry.
As co-founder Don Mosites explained, “It essentially allows your more flexibility on price and the ability to know your counterparty, assess with whom you'd like to do business more directly.” He continued, saying, “With the OTC tools, this unlocks a totally new world of liquidity. This is going to enable trades of any size to happen with the AirSwap network.”
Institutions are anything but new to the cryptocurrency industry, so it may be strange to think that there would be a sudden interest in decentralized exchanges. The fact it, these platforms thrive on the lack of control by a single entity, but DEX primarily is used for a practical purpose. A DEX specifically lets investors have full control over the possession of their private keys, which is not offered on a centralized exchange.
Even with this benefit, there are plenty of institutions that do not actually want to handle the custody, assigning that role to a third-party representative instead. Based on this information, it is natural that BitGo, a multi-signature wallet provider, decided to engage with AirSwap, considering their high-end custody clients.
According to AirSwap, its DEX offers a more efficient and helpful way of handling OTC trades than other opportunities. In fact, too many of these types of transactions are handled on platforms like Skype, which is incredibly time-consuming. Unfortunately, there are still plenty of measures that keep DEX from being used for institutional investors that need to be solved.
One such issue is accountability, since a DEX typically does not provide many safeguards for recourse for bad negotiations. According to Preston Byrne, who works as an independent blockchain consultant,
“That's one of the reasons you have big counterparties in transactions. It's an insurance policy.”
To make matters works, decentralized systems do not usually have the same efficiency as a centralized platform. Byrne says that this issue causes investors to consider other potential issues, like
“Why are we paying the decentralization penalty if we're not getting all the functionality of an OTC trade, which is individually negotiated and varies somewhat from the current market price?”
Some of the features being introduced into AirSwap are going to remedy these big problems. For instance, Civil, which is a journalism startup, will be bringing in AirSwap’s ability to purchase tokens off a third-party platform. There are actually 16 different blockchain projects plan to use AirSwap for this exact reaction, which cover a wide range of interests.
The first year of partnering with Civil will require investors to go through the KYC process, which will help prove the status of the user, establishing that they understand storage and use for crypto. The CEO, Matt Iles, said that all of these new benefits, including atomic swaps and price discovery, helps with his platform’s goal to keep their liquidity and still establish a closed ecosystem.
There is plenty of opportunities for Civil to earn tokens with the collaboration, like by supporting a newsroom, referring new people to the platform, and sharing content. As Iles puts it,
“We're both trying to pioneer what this consumer token world could look like,” Iles said. “AirSwap is interested in exploring this consumer space with us as something that is going to grow and become a larger part of their offering.”