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Trading 101: How to Optimize Your Crypto Trading for the Lowest Cost, Starting with your Choice of Base Currency

December 11, 2020
For traders, the primary motivation when trading is undoubtedly to earn a return on investment. Unnecessarily high transaction fees can, however, deplete trading account balances and erode returns, and so, serious investors will always look to minimize extra costs.

This is where an investor’s choice of trading venue becomes so important, as of course, there can be significant differences in services provision, fees, liquidity, and operational transparency between platforms.

In the last decade, since the emergence of cryptocurrencies, governance and investor protection issues have become a focal point, particularly for exchanges. Many continue to lack the controls and transparency[1] required to protect investors[2], and indeed many are regarded as potentially exploiting their clients[3]. Some are considered to have opaque fee structures and the use of in-house market makers, who benefit from an asymmetrical view of the market, sometimes at the expense of their clients[4].

EQUOS — A More Equitable and Transparent Digital Asset Trading Environment

It was for this reason that the EQUOS digital asset exchange was designed with fairness, trust, and transparency at its core. One of its key objectives is to provide a level of comfort for people who want to trade cryptocurrencies, including those who may have been hesitant due to perceptions of insufficient and immature market infrastructure.

EQUOS has taken the approach of actively engaging with regulators in order to enhance investor protections. It also operates at a level that exceeds many other exchanges, given it is the only crypto exchange to be part of a NASDAQ listed company, and is overseen by the US Securities & Exchange Commission. This requires that EQUOS not only operates to the highest levels of transparency and regulation, but also reflects its desire to be seen as a source of trust and credibility for clients.

Creating a fairer digital asset exchange environment in EQUOS also means incorporating this ethos in its operational design. For example, EQUOS offers USDC as its base currency for trading with other cryptocurrencies, such as Bitcoin and Ethereum, and also offers the ability for customers to deposit USD, and then swap into USDC on a one-to-one basis, without any exchange rate fees or risk. This so-called fungibility is a central characteristic of all functioning currencies but is surprisingly rare in crypto. Fungibility is also central to minimizing extra costs for investors trading through EQUOS, as it empowers traders to efficiently allocate into their chosen assets while incurring the least amount of fees associated with bridging through a stablecoin base currency.

By offering USD — USDC fungibility, clients can use both currencies interchangeably at no additional cost. For every US dollar clients deposit for conversion into USDC, they will receive a 100% equal exchange into USDC. This setup then allows traders to hold their account in whichever currency best suits their trading strategy, while at the same time allowing them to participate in trading crypto that necessitates the use of a bridging stablecoin such as USDC.

Stablecoins and Fungibility

Stablecoins are important to digital asset fungibility as they represent a major source of liquidity for the cryptocurrency market. This is because many cryptocurrencies, such as those associated with crypto-collectibles and crypto-gaming, as well as tokenized physical assets, are classified as non-fungible tokens (NFTs); therefore, trading through stablecoins is an essential step in procuring and offloading these assets. Stablecoins such as USDC, Tether, and DAI are specifically designed to build the necessary bridge between fiat currencies and cryptocurrencies, while offering traders price stability and an increased degree of reserve asset transparency.

EQUOS does not charge for deposits or for conversions of USD into USDC

Many crypto exchange platforms have delineated their offerings under a stablecoin, without offering customers the choice to structure their funds in such a way that best suits their individual requirements. If customers can only hold funds on account in USD, they may have to step through a process of getting their assets into the correct underlying base currency before trading into the wider crypto ecosystem and must do this at their own cost. EQUOS not only enables the management of assets in the risk currency of choice, but also allows for the trading of account balances in USD and USDC to be consolidated, enabling traders to execute in one single pair. This is an efficient solution which saves traders time, money and effort and allows for simplified account management.

EQUOS customers can determine whether they wish to have their account denominated in US dollars or in USDC, its chosen settlement stablecoin. This is unique in a market where the clients of many other exchanges incur cross-conversion fees in order to trade crypto, which can erode into their trading account balances.

USDC/USD Fungibility

EQUOS clients benefit from the ability to deposit assets onto the exchange and trade in such a way that is agnostic as to whether or not their account is held in USD or USDC. EQUOS has built an effective fiat on-ramp and off-ramp for customers with the absolute minimum complexity and cost. Generating comfort, confidence and fairness began with ensuring customers had the ability to deposit assets onto the platform in a way that was simple, easily understood and based on their own experiences.

The central importance of USDC fungibility was an obvious choice when designing the EQUOS offering for two key reasons:

1. Reduced Friction

2. Improved Liquidity

BTC Fungibility & AML

Having best-in-class KYC and AML controls is also integral to maintaining the fungibility of the Bitcoin being traded on EQUOS.io. This is because prospective purchasers are far less likely to be interested in procuring Bitcoin or other digital assets which have the potential to be traced to unfettered and illicit uses, particularly in light of the fact that the legal frameworks protecting the fungibility of fiat currency are not yet comprehensively established for digital assets.

For more information, visit EQUOS.io.

[1] Cryptocurrency Exchanges Are Vulnerable to Manipulation, Report Finds

New York attorney general’s office concludes many cryptocurrency exchanges lack safeguards to ensure ‘fairness, integrity and security’ Sept. 18, 2018

https://www.wsj.com/articles/cryptocurrency-exchanges-are-vulnerable-to-manipulation-report-finds-1537290031

[2] Forbes — New Report Illustrates The Problem With Cryptocurrency Exchanges Jun 15, 2019 https://www.forbes.com/sites/yoavvilner/2019/06/15/new-report-illustrates-the-problem-with-cryptocurrency-exchanges/?sh=1f83ebf06b60

[3] CoinTelegraph — Data Transparency and Fake Trading Volumes — Institutionalizing Crypto — March 15 2020

https://cointelegraph.com/news/data-transparency-and-fake-trading-volumes-institutionalizing-crypto

[4] Cointelegraph — How to provide liquidity to cryptocurrency exchange Sep 07, 2020

https://cointelegraph.com/news/how-to-provide-liquidity-to-cryptocurrency-exchange









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