We are witnessing the rise of decentralised trading platforms that go beyond the more traditional cryptocurrency trading exchanges, although it’s hard to believe we are already using the term ‘traditional’ in such a new market.
These new exchanges also have ‘dark pools’, which offer liquidity that is unavailable at traditional exchanges. However, it can be difficult to find out all the exact details of these dark pools as they appear to be a closely guarded secret.
If you’re wondering what a ‘dark pool’ is, here’s a definition from Investopedia:
“Dark pools are an ominous-sounding term for private exchanges or forums for trading securities; unlike stock exchanges, dark pools are not accessible by the investing public. Also known as “dark pools of liquidity,” they are so named for their complete lack of transparency.”
There are currently four exchanges offering this function.
This is a centralised exchange, but it is a major one and has no problem with showing cryptocurrency liquidity. However, Bitfinex also wants to appeal to institutional investors and large cryptocurrency holders through its dark pool offering. Its dark pool does involve a slightly higher fee than with normal trading, but since these trades don’t affect the visible order book, most investors don’t mind paying for the privilege.
Kraken introduced its ‘dark pool’ in 2015 and may have been the first exchange to offer the service. It is still in operation today, and it seemingly helps traders achieve their goals without triggering massive market price swings across the exchange itself.
This is a fairly new exchange offering dark pool trading. It is a project with a decentralised dark pool, which doesn’t focus on just one cryptocurrency, but offers atomic trading of Bitcoin, Ethereum, and most ERC20 tokens in a dark pool environment.
This started as a cryptocurrency broker-dealer, but it decided to follow Kraken’s lead and enter the dark pool space through a partnership with Bitcoin mogul Jered Kenna. TradeZero opened for business in 2016 and is still going strong today.