A lack of easy liquidity is one of the biggest problems facing the mass adoption future envisioned by many within the cryptocurrency community.

Moving forward, the crypto space needs the money from institutions and institutional investors in order to effectively gain access to the capital needed for expansion and true market capitalization. And if the outlandish predictions of some crypto experts are to be believed, an increase to liquidity is a much-needed prerequisite to the institutionalization of crypto.

But substantive solutions for the problem of liquidity have several major structural barriers to implementation.

Chief among these barriers is the idea that, by their very nature, cryptocurrencies are relatively decentralized. While many exchanges are centralized in most aspects, the sharing of information between exchanges is complicated by the immutable and decentralized blockchain technology upon which the platforms are often based.

This creates an issue for liquidity. Market participants who want to transfer or trade their cryptocurrencies between exchanges and banks need to be able to conduct these transactions quickly and nearly immediately.

This is a particularly potent concern for day traders who rely on the liquidity of their markets to keep the money moving and profits up. One cryptocurrency protocol has proposed an idea that might just help to actualize the concept of true liquidity throughout the cryptocurrency markets.

According to the founder and CEO of the organization, Liam Kovatch, the foundation is working to “create open […] and efficient global markets.” The startup company has already won a massive amount of USD $1 million in order to create a “decentralized order book” that would be combined and shared among any exchange that wants to use it.

The order book would efficiently track and record transactions occurring on different blockchains, facilitating the quick trade and exchange of information across different platforms.

Paradigm Raises Seed Round Led by Polychain Capital for Relay Protocolhttps://t.co/uu0NIXK2n6

— Paradigm (@paradigmfdn) October 16, 2018

The foundation is headed by a cast of respected names in the academic world, including two co-founders from Columbia who are currently on-leave from their university in order to continue work on the important project.

Armed with the support of capitalist monsters like Dragonfly Capital, Chapter One, and Polychain Capital, the startup is projected to continue to win more funding in their development of what could be a potential solution to the liquidity issue currently facing the evolving crypto markets.

Much of the motivation to create the project initially, according to its founders, is the belief that the walls separating major exchanges will eventually fall. Although the market is laden with incredible competition at the moment which assuredly prevents some forms of healthy cooperation, the future of the industry will require exchanges to recognize the financial and long-term structural advantages to a concerted increase to liquidity.

At the moment, the slow nature of decentralized exchanges is a major obstacle to securing the interest of both retail and institutional investors and backers.

To solve this issue, Paradigm will function as a “sidechain,” allowing exchanges to process thousands upon thousands of different changes to the order book at one time, sharing order book changes across multiple platforms for a seamless liquidity experience for the user.

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