Stellar’s (XLM) Liquidity Is Key Moving Forward
Stellar (XLM) is currently listed in approximately 79 exchanges. This is extremely low when you compare this number to that of other prominent coins. Bitcoin (BTC) is listed in 400 exchanges. Ethereum (ETH) is also listed in 400 exchanges. Ripple (XRP) is listed in 136 exchanges with Litecoin (LTC) enjoying visibility in 400 exchanges. Bitcoin Cash (BCH) is also more available than Stellar with visibility in a total of 262 exchanges.
Doing analysis, the number of exchanges that XLM is listed is 19% that of BTC, ETH and LTC (all in 400 exchanges). XLM’s availability in exchanges is 56% that of XRP and 30% that of Bitcoin Cash.
Investopedia.com defines liquidity as the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price. Market liquidity refers to the extent to which a market, such as a country’s stock market or a city’s real estate market, allows assets to be bought and sold at stable prices. If an asset is illiquid or unavailable, traders are forced to sell at discount prices. Take for example an illiquid assets such as rare paintings that are centuries old. Unless there is a willing market for such, even if you own the oldest painting worth millions to you as an owner, you will be forced to part with it at a discount if you want to sell it quickly. The other option is to set your million dollar price tag and wait for days, if not years, for it to sell.
Using this description and looking at the state of XLM’s liquidity, it is therefore safe to conclude that Stellar (XLM) needs to be more liquid or available in the crypto-markets for it to show some constant action in the markets and possibly some gains. This can only be made possible through more listings in the exchanges.
However, with listing comes the challenges of paying exorbitant fees to the crypto-exchanges that have been reported. According to research from Autonomous Next LLP, crypto exchanges are bagging millions in fees to list tokens and coins. The firm is quoted as writing:
“It sounds like the market price to list a crypto token on an exchange is $1 million for a reasonably regarded token, to $3 million for an opportunity to get quick liquidity. We don’t know these numbers with certainty, but suspect the order of magnitude to be roughly in line with today’s reality.”
Given the reality that Stellar is run as a non-profit, it is safe to conclude that the project is more focused on delivering on the promised objectives, rather than the price of the coin in the markets. The Stellar Website is quick to state:
“Stellar.org connects people to low-cost financial services to fight poverty and develop individual potential.”
So how does Stellar increase its liquidity?
Firstly, there needs to be awareness as to where you can easily buy XLM. More traders need to know that XLM is listed in prominent exchanges such as Binance, Upbit, CEX.io, Bittrex, Kraken, HitBTC, just to name a few. The mentioned exchanges are the popular ones in the crypto-verse and with considerable daily trade volume. The most recent listings are HitBTC and CryptoMKT all of which happened in March this year.
Secondly, the Stellar coin and organization need to strive for adoption of the coin in actual real life transactions. With its goal of connecting people to low-cost financial services to fight poverty and develop individual potential, there is a willing market in Africa, South America and East and Central Asia. These regions have been classified as developing regions where mobile money apps such as MPesa have taken mobile banking by storm. It is time for Stellar to move into this space and develop some type of app for mobile transactions.
Perhaps we can give the development team a break on this endeavor and do it as a community based project that will involve developers from the aforementioned regions of the world.