StraitsX Academy

StraitsX Academy #7: Secure and private stablecoin trading: Why you should consider using StraitsX OTC Desk

June 6, 2023

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.

What is a large DeFi trade?

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.

Risks involved in large DeFi trades

Supply and demand mechanics

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. 

Higher transaction fees and longer processing times

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.

Front-running and profit-taking risks

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. 

Advantages of Using an OTC Desk for Large Defi Trades

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:

  • Liquidity: OTC desks offer access to a much deeper pool of liquidity compared to public exchanges. This can help to ensure that a one-time trade is executed at the intended price without any slippage.
  • Customised Trade Terms: OTC desks offer users the flexibility to customize trade terms such as price, quantity, and timing to meet their specific needs. This can help to minimize the risks involved in large trades.
  • Privacy: OTC desks offer a more private way to trade cryptocurrencies, as users do not have to disclose their trading activity on public exchanges.

StraitsX OTC Desk: Features and Benefits

StraitsX offers an OTC desk that provides users with the following features and benefits:

  • Competitive Rates: StraitsX offers competitive rates for large trades, ensuring that users receive the best possible price.
  • Access to Multiple Stablecoins: StraitsX OTC desk provides users with access to multiple stablecoins, making it easier to execute trades involving multiple assets.
  • Fast and Secure Transactions: StraitsX OTC desk ensures fast and secure transactions, with all trades settled in a matter of hours.

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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