In the world of cryptocurrency trading, large trades can come with significant risks. While decentralised exchanges have made it possible for anyone to trade cryptocurrencies easily, executing large trades on a public exchange can result in price slippage, high transaction fees, and limited liquidity. This is where an OTC (Over-The-Counter) desk comes in, offering a more secure and private way to trade large amounts of cryptocurrencies.
A large Defi trade can be defined as a trade that involves a significant amount of cryptocurrency. The amount can vary from user to user, but generally, a large trade is anything that is over a few thousand dollars worth of cryptocurrency. Large trades come with higher risks as they can affect the market's liquidity and can lead to price slippage.
The primary risk involved in large DeFi trades is price slippage due to supply and demand dynamics. When a large buy order is placed, it can quickly consume the available sell orders at the current market price. As demand exceeds the immediate supply, prices may start to rise. Similarly, a large sell order could exhaust available buy orders, causing a sudden decline in prices.
Large trades on public exchanges can also lead to higher transaction fees and longer processing times. Certain exchanges may employ tiered fee structures where investors may end up paying more in transaction fees as higher volume trades cross into higher fee tiers. Moreover, public exchanges may require splitting large volume DeFi trades into multiple smaller orders to increase the chances of finding available liquidity. This can result in partial fills, where only a portion of the order is executed at a specific price, and the remaining volume is pushed to subsequent orders at potentially different prices, leading to an overall increase in processing times.
Another risk involved could be sandwich attacks for large DeFi trade. A crypto sandwich attack is a common DeFi or, rather, liquidity pool occurrence where attackers exploit market and liquidity imbalances to execute profitable trades at the expense of victims or vulnerable traders. The attacker front-runs the victim's trade, hikes the prices, and makes the victim buy at a higher price.
An OTC desk can provide a more secure and private way to execute large Defi trades. Here are some of the advantages of using an OTC desk:
StraitsX offers an OTC desk that provides users with the following features and benefits:
In summary, large Defi trades can be risky, and executing them on public exchanges can lead to price slippage and higher transaction fees. Using StraitsX OTC desk can help to mitigate these risks and provide users with a more secure and private way to execute large trades. With competitive rates, access to multiple cryptocurrencies, and fast and secure transactions, StraitsX's OTC desk is an excellent option for users who frequently trade large amounts of cryptocurrency.
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