Exploring Multi-Venue Strategies: Kaiko’s Guide to Navigating Liquidity Challenges for Digital…


Exploring Multi-Venue Strategies: Kaiko’s Guide to Navigating Liquidity Challenges for Digital Asset Traders During Crisis Periods.

In this article, we emphasize the importance of being multi-venue when looking for liquidity during a crisis period in digital asset trading. We demonstrate how the recent USDC depeg event highlighted the advantages of diversifying across centralized and decentralized exchanges to maximize liquidity and trading opportunities

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Our use case today will focus on why it’s crucial to be multi-venue when looking for liquidity during a crisis period for a digital asset trader.

As a digital asset trader, it’s vital to find liquidity for successful trades. By evaluating bid-ask spreads, slippage, and market depth, traders can identify liquid markets and execute trades effectively. We’ll analyze these metrics from Kaiko’s data to guide us in finding liquidity during a crisis.

Kaiko data: Order Book Snapshots Depth, Order Book Snapshots Slippage

Context on USDC depeg:

In March 2023, a liquidity crisis occurred in the cryptocurrency markets due to technical difficulties at Silicon Valley Bank (SVB). The crisis also caused the temporary de-pegging of the USDC stablecoin (up to $0.9 as this graph shows). The stablecoins issued by Circle which held a significant portion of their reserves, $3.3bn in SVB, triggered a panic that the stablecoin was no longer fully backed.

USDC depeg to 10% of its value on 11/03

During this chaotic weekend, traders had only one thing on their mind: where to liquidate their USDC holdings. Traders faced the challenge of finding liquidity, highlighting the need for reliable data and liquidity analysis during times of crisis. This is our use case: where would you be able to find liquidity in this instant as a trader where the trade volume hits an all-time high?

Insights from Market Depth Analysis

In our exploration of liquidity during the USDC depeg crisis, we turn our attention to Market Depth, a crucial metric that gauges the availability of orders within a specific price range. By examining the Market Depth volume of the 1% order book for various exchanges, we can gain valuable insights into liquidity dynamics during this challenging period.

Source: Kaiko data Orderbook Snapshot, USDC/USDT trading pairs on OkeX, BinanceUS, Kraken, Gemini, and Bitforex

Key Findings:

  1. Overall Decrease in Market Depth: Circle’s disclosure of tying up 10% of their reserves at SVB had a significant impact, leading to a notable decrease in the overall Market Depth volume.
  2. OKEx’s Unique Behavior: Interestingly, OKEx exhibited a distinct behavior during the crisis, experiencing a peak in the middle of the turmoil while other exchanges were seeing a decline. This anomaly warrants further analysis.
  3. Following the Federal Reserve’s announcement, caution seemed to prevail in the market, except for OKEx, which appeared unaffected. This observation suggests that regional interpretations ( since OKEx operates in the Asian market while the others are US-based) and market dynamics could play a role in liquidity variations (OkEx is the highest volume CeX between the fourth )
  4. OKEx Emerging as a Market Leader: During the recovery phase, OKEx emerged as a prominent player, surpassing Kraken, which had previously been the market leader. The fact that OKEx operates in the Asian market while the others are US-based might explain this shift in market dominance.
  5. Cautious Consideration of OKEx’s Liquidity: While OKEx may appear to offer more liquidity at first glance, its contrasting behavior requires cautious consideration. Traders should exercise prudence when evaluating investment opportunities on this platform.


Analyzing Market Depth during the USDC depeg crisis provides valuable insights into liquidity dynamics across different exchanges. This information empowers traders to make informed decisions, be aware of regional nuances, and navigate the complex landscape of digital asset trading. By embracing a multi-venue approach and leveraging data-driven analysis, traders can position themselves for success even in times of crisis.

Insights from Slippage Analysis

In our examination of liquidity during the USDC depeg crisis, we now shift our focus to Slippage, a critical metric that measures the deviation between the expected execution price and the actual executed price. By analyzing slippage on different exchanges, we can identify potential execution costs and make informed decisions to mitigate slippage-related risks.

Source: Kaiko data Orderbook Slippage, USDC/USDT trading pairs on OkeX, BinanceUS, Kraken, and Gemini

Key Findings:

  1. Average Slippage Comparison: The chart presents the average price slippage of a $100k order size based on the quote asset. Kraken and OKEx consistently demonstrated low hourly average slippage, indicating their resilience and lower impact during the SVB crisis.
  2. Higher Slippage and Volatility: Gemini and BinanceUS demonstrated the highest average slippage during the examined timeframe, coupled with greater volatility. Furthermore, even after the company’s update, BinanceUS continued to experience elevated slippage, indicating a more challenging recovery period for the exchange.


Understanding slippage is particularly crucial during a crisis when quick decision-making is required. By assessing slippage across various exchanges, traders can identify exchanges with lower slippage and greater resilience during crises. This knowledge enables traders to navigate the market more effectively, optimize execution costs, and increase the potential for successful trades. In the fast-paced and ever-evolving world of digital asset trading, understanding and mitigating slippage risks is paramount to achieving trading goals.

Insight from Bid-Ask Spread

The bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for an asset, serving as an indicator of supply and demand. By analyzing the spread between buying and selling prices, we can gain insights into the supply and demand dynamics and evaluate the ease of asset exchange at stable prices.

Source: Kaiko data Orderbook Slippage, USDC/USDT trading pairs on OkeX, BinanceUS, Kraken, and Gemini

Key Insights:

  1. Widening Spreads during the USDC Deppeg Crisis: The USDC depeg crisis led to extreme price volatility and a significant decrease in market depth due to traders offloading their assets. This resulted in unprecedented bid-ask spreads across all exchanges. Gemini and BinanceUS experienced spreads as wide as 1.5%, reflecting the challenging liquidity conditions during the crisis.
  2. Recovery of Spreads: Following the Federal Reserve’s announcement, spreads took longer to return to normal levels as market makers remained cautious about further price swings. BinanceUS and Gemini maintained spreads higher than usual, up to 20 times higher, indicating a cautious approach and a more prolonged recovery period. These exchanges likely conducted internal assessments of their exposure, which may have contributed to the extended time required for a return to normalcy. The volatility and higher spreads persisted until almost the end of March.
  3. Okex’s Distinct Behavior: Okex exhibited a different pattern by not widening spreads like other platforms during the crisis. This can be attributed to their lower exposure and quick assessment of the situation. Similarly, Kraken, which has a comparable trading volume to Okex, also experienced lower spreads, up to 0.5%. These exchanges displayed relatively better liquidity conditions during the crisis.

Compared to a non-top-tiers exchange:

Source: Kaiko data Orderbook Slippage, USDC/USDT trading pairs on Bitforex, OkeX, BinanceUS, Kraken, and Gemini

Including the graph of a non-top-tier exchange like Bitforex provides additional insights into the spread dynamics during the USDC depeg crisis. Bitforex experienced a massive 1500% increase in spread, with trades occurring at significantly different price levels within a short timeframe (Here the spread is in absolute value, meaning that we saw trade at 0.6$ and the hours after trade at 1.6$ during March 11). This extreme spread volatility created a substantial arbitrage opportunity for traders. While Bitforex exhibited a similar pattern to the other exchanges, it’s important to note that the scale of spread fluctuations was much larger on this platform. This graph highlights the significance of liquidity analysis even on non-top-tier exchanges, as they can present unique opportunities and challenges for traders.


The Bid-Ask Spread serves as a crucial indicator of liquidity in digital asset trading. During the USDC depeg crisis, bid-ask spreads widened significantly across exchanges, reflecting the challenging liquidity landscape. BinanceUS and Gemini maintained higher spreads for an extended period due to cautious market-making strategies. In contrast, Okex and Kraken demonstrated better liquidity conditions with narrower spreads.

Insights from Volume Pattern

Source: Kaiko data Orderbook Snapshot, USDC/USDT trading pairs on Bitforex, OkeX, BinanceUS, Kraken, and Gemini

Analyzing the volume patterns between exchanges provides valuable insights into the stability and integrity of the market. During the USDC depeg event, major exchanges like Kraken and OKEx displayed similar volume behavior, indicating a broad market correlation. OkEx showed a faster recovery, potentially influenced by regional factors. Similarly, BinanceUS and Gemini, being US-based exchanges, exhibited comparable volume patterns. However, Bitforex stood out as an outlier with significantly higher trading volume after the event compared to before. This unusual volume pattern raises suspicions of market manipulation by Bitforex, emphasizing the importance of vigilance and scrutiny in evaluating exchanges’ integrity. Traders should be cautious when dealing with exchanges that deviate significantly from the standard volume trends, as it may indicate artificial inflation of volumes or market manipulation.

Incorporating DeFi into CeFi Strategies: A Winning Strategy for Traders

This section explores the opportunity to incorporate DeFi into CeFi trading strategies. DeFi can be especially valuable during the CeFi crisis, as it offers access to a wide range of liquidity pools and trading opportunities that may not be available through traditional CeFi platforms. By incorporating DeFi into their trading strategies, traders can reduce their reliance on centralized exchanges and gain greater flexibility and control over their trades. Overall, prioritizing data quality and embracing the potential of DeFi can be a winning strategy for CeFi traders looking to succeed in the digital asset market

The SVB crisis revealed a significant disparity in liquidity between centralized exchanges (CeX) and decentralized exchanges (DEX). Despite a majority of trading volume occurring on CeX, this graph demonstrates that over 90% of the trading volume during the crisis was observed on DEX. The primary reason for this lies in the illiquidity of USDC, primarily used within the DeFi ecosystem. As centralized exchanges’ order books proved insufficient to handle the sudden surge in selling pressure, bid-ask spreads widened, causing high slippage and reduced liquidity (as we saw earlier). Traders sought refuge in DEXs, where liquidity was more abundant.

This significant influx of traders on DEXs had large impacts, where the most arbitrage opportunity was on DeX pools, namely Uniswap V3 and Curve’s 3pool. Ultimately, Curve facilitated $6bn in swap volume, surpassing all other USDC markets.

Kaiko conducted a detailed analysis of Uniswap V2 and Curve Automated Market Maker (AMM) formulas during the SVB crisis. This analysis uncovered important details about their performance and the involvement of bots in executing complex transactions to exploit arbitrage opportunities. As a result, the market experienced a wide spread between bid and ask prices, leading to significant outliers in trading activity. Some of these outliers included swaps at a value of $1, while USDC was depegged elsewhere.

This highlighted the importance of considering DEXs as a source of liquidity during market events. It also indicated the need for traders to diversify their trading strategies and consider decentralized finance (DeFi) markets. This event showcased the significance of data quality in providing accurate and actionable insights that can help traders optimize their trading strategies and ultimately improve their market success.


As a conclusion, it is evident that being data-driven and utilizing multiple sources of information is crucial, particularly during times of crisis, to make informed trading decisions. Having comprehensive and accurate data allows traders to assess market conditions, identify potential risks, and seize opportunities. By staying informed and leveraging data-driven insights, traders can enhance their decision-making process and increase their chances of success in the market.

The SVB crisis underscored the importance of considering DEXs as a reliable source of liquidity during market events. Traders need to diversify their strategies and explore the potential of DeFi markets. This event emphasized the significance of high-quality data in providing accurate insights that can optimize trading strategies and enhance overall market success. By embracing data quality and leveraging DeFi’s liquidity pools, digital asset traders can position themselves for success in the ever-evolving landscape of cryptocurrency trading.

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