Smart Chain Trading
Chain Trading allows your users to quickly perform swaps, even between assets that don't have a direct market available, ensuring as seamless an experience as possible.
Last updated
Chain Trading allows your users to quickly perform swaps, even between assets that don't have a direct market available, ensuring as seamless an experience as possible.
Last updated
Chain Trading is a method in which two assets, that don't have a direct market with each other on your exchange, can be traded using a third intermediary asset (often USDT).
Behind the scenes, this operates by performing two swaps for the user's single trade: once with the held asset to the intermediate asset and then once from the intermediate to the desired asset.
Chain Trading is available on all HollaEx plans.
Chain Trading is a great way to assist in the user experience by simplifying both the user and operator experience.
For the user, it minimises and simplifies the number of actions that are required to trade between two assets they own. For example, if your exchange supports USDT, BTC, and XLM, with markets for USDT/ BTC and USDT/XLM, but not for BTC/XLM, they will still be able to act as if there were a direct BTC/XLM market.
On the operator end, there are two primary benefits:
Similar to the user, it simplifies the experience. Instead of having to set up markets between all assets on your exchange, you can focus on linking assets to your intermediary asset and not have to be too concerned about setting up more niche markets directly.
It also opens up a new method of generating profit, as since a spread can (optionally) be applied, you can obtain profit on the users' trades that benefit from this convenience.
One place Chain Trading can help out is in the use of the Fiat Controls. Generally, operators using the Fiat Controls will set up OTC Broker deals for the Fiat they have enabled on the exchange, and then, for the assets they want to allow Fiat <> crypto conversion for.
Of course, it is always possible to set up this OTC Broker for the fiat currency and every crypto asset on the exchange, but this does require the labour of initial setup, and the regular checkup to ensure prices are as they should be, and assets are sufficient to maintain trading activity.
Chain Trading can simplify this significantly. With it, you can focus on a select market (such as whatever fiat and USDT), and with chain trading, users will be able to trade for the fiat asset and all other assets on the exchange that have a market with your intermediate asset.
As an example, imagine we provide liquidity to a GBP (British currency) / USDT market on the exchange, and this is running efficiently. Users could still trade for say XLM, DOGE, LINK, directly with their GBP, even if we, as the operator, have never considered these markets.
All HollaEx plans offer the Chain Trading feature. To enable it, navigate to the General section on the operator controls, then the Features tab, and scroll down and check the Chain Trading box.
The options for Chain Trading are dealt with directly from this same page and are, fortunately, simple.
Hit the green Configure button beside the Chain Trading feature name, and the menu in the following image will appear.
Here we have just three options:
Currency: The source coin, which will be used as the intermediary asset between the held and desired asset. In most cases, this will be USDT, due to its common usage for pairings.
Source Account ID: This is the account that will have a sufficient amount of the intermediate and perform the required trades, such that the user can trade between their two desired assets.
Spread: This is a premium that is applied to the user who has requested the trade. This is defined as a percentage of the trade's value.
The source account is the lynchpin of Chain Trading, and thus, it is crucial to ensure this account always has a sufficient amount of the intermediate asset to perform all required trades. In the case where this asset is not sufficient, this could lead to issues where one part of the trade is complete but the second is impossible, leading to issues with providing the user what it is they want.
The choice of source account is left to the operator. This could be the admin, or it may be wise to set up a dedicated liquidity account that is used solely to be the middleman in chain trading.
This account should be given an account tier that offers them fee-free trading, to ensure that the trades it performs are not going to negatively impact its
The choice of the currency is vital. As a general rule, USDT will be king in this matter. On the HollaEx Network (and beyond), USDT is almost universally used as a pair for all assets. What this means is that you will minimise the number of trades necessary to provide the user with what they want.
