5 Top Crypto Liquidity Providers: Pros and Cons

We describe in detail who liquidity providers are and how they work. List of the best crypto liquidity providers, their pros and cons in a comparative table.

According to Crypto Rover, a wave of volatility due to Bitcoin’s concentrated liquidity could sweep the market by the end of March 2025. Trading will intensify, and market participants are bracing for an impending bullish momentum.

Bitcoin as a key digital asset sets the mood for the entire market, influencing other coins and the liquidity market as a whole. Let's find out in more detail who the cryptocurrency liquidity providers are and how to choose the best one.

What is a crypto liquidity provider?

A cryptocurrency liquidity provider (LP) is an individual or any independent organization that holds a pool of liquid virtual assets. A pool is defined as a particular set, collection or portfolio of assets.

The provider performs the role of an intermediary between the parties to the transaction to provide the necessary amount of funds to execute the order placed. LP functions in different organizational forms - it can be an investment bank, a trading firm, a financial group, a single individual, etc.

Typically, a decentralized autonomous organization (DAO) acts as a liquidity provider in the crypto community. Its key role is to pool the funds of individual system participants into a single pool.

For supplying cryptocurrency liquidity, the organization is given tokens as a reward, acting as an initial investment, and other incentives are also provided.

Here is an example of how a liquidity provider operates for illustrative purposes:

1. a buyer opens an order for 100 units in cryptocurrency - in other words, he wants to buy a given number of coins;
2. the absence of a liquidity provider forces the buyer to independently search for a seller who can fulfill the trade order;
3. each virtual coin has its own specifics and there are many digital assets for which it is difficult to quickly find an executor;
4. it is in this situation that the support and work of crypto liquidity providers is very useful;
5. the cryptocurrency exchange platform where the transaction is carried out interacts with LP, so the buyer has no difficulties with the execution of the declared order;
6. after the order is placed by the buyer, the exchange receives the required amount of coins from the cryptocurrency provider, thus ensuring a quick execution of the transaction;
7. in the future, when a new participant sells these very coins, the exchange can return them to the supplier.

As you can see, liquidity provider provides financial stability for many crypto platforms, even some crypto-friendly banks use external providers to provide financial reserves.

In the long run, the total amount of tokens held by the provider does not change. Some coins are replaced or exchanged for others, thus the value is subject to temporary fluctuations. To avoid such risks, liquidity networks provide liquidity provider tokens to suppliers as settlement receipts for the initial investment.

How does liquidity work in crypto?

Liquidity is a measure needed to determine how easily an asset can be sold and bought.

If we talk about cryptocurrency liquidity, this concept has a collective character. It performs several key functions, namely:

• shows the speed of purchase/sale of virtual coins;
• characterizes the level of stability of the market as a whole;
• minimizes slippages and builds trust among cryptocommunity participants.

With virtual assets that have high liquidity and high trading volume, it is much easier and faster to make exchange transactions without risking undermining market stability.

Liquidity in the cryptocurrency market is of utmost importance due to the following factors:

• price stability - on trading platforms where a high level of liquidity is maintained, large-volume orders do not affect market price indicators. If a scenario unfolds in low-liquid conditions, the most modest transactions can provoke sharp price fluctuations. Thus, in a crypto exchange with highly liquid conditions, all transactions are smooth and the price performance of the market is predictable;
• minimization of slippage - on liquid platforms traders face the lowest risk of slippage when large transactions are conducted. Low-liquid platforms have strong discrepancies between expected and actual prices, and this negatively affects the profitability of crypto trading, as well as undermining the confidence of counterparties;
• market confidence - traders, individuals and institutional investors benefit from using crypto exchanges with reliable liquidity, as this guarantees order execution without delays;
• interest from institutional investors - the involvement of institutional players depends on how stable the market is and whether it maintains high liquidity. Such players are interested in cooperation with reliable platforms that can attract large trading volumes;
• functional optimization - liquidity affects the possibility of introducing such modes as spot trading, margin transactions and the OTC market. In order to support such functionality, it is necessary to have sufficient liquidity reserves.

Who provides liquidity for crypto?

Cryptocurrency liquidity is realized thanks to the work of suppliers, which are both individuals and specialized companies represented by institutional market makers or decentralized communities. A cryptocurrency liquidity provider is a guarantor that the transaction will be carried out as quickly and in full as possible.

Thus, with the help of a liquidity provider, it is possible to fill the gap between sellers and buyers to compensate for the market imbalance.

Crypto liquidity providers list

Among the best cryptocurrency liquidity providers that ensure smooth operation and execution of trading orders on crypto exchanges are the following:

• B2Broker
• Cumberland
• Galaxy Digital
• GSR Markets
• B2C2

Let's look at the advantages and disadvantages of each.

B2Broker

Founded in 2014, B2Broker has established itself as a leading provider of cryptocurrency liquidity. It provides access to over 20 market levels and a wide range of over 1,500 trading instruments. With 1:10 leverage and spreads starting at just $0.1, the company boasts one of the most extensive pools of cryptocurrency liquidity in the industry.

Advantages of B2Broker:

• access to a wide network - B2Broker connects companies with a wide range of suppliers, buyers and service providers, helping them expand their presence and capabilities;
• time and cost efficiency - companies can use the B2Broker platform to quickly find pre-screened suppliers and buyers;
• market expertise - the broker offers information on pricing, trends and best practices that is not publicly available;
• negotiation support - B2Broker can assist in negotiations, ensuring that companies get the best possible deals without having to conduct lengthy negotiations themselves.

Minuses of B2Broker:

• brokerage fees;
• limited direct control.

Cumberland

Cumberland — is one of the leading institutional liquidity providers specializing in over-the-counter (OTC) trading and market making solutions. With operations in multiple jurisdictions including the US, UK and Singapore, it is trusted by hedge funds, asset managers and large institutional traders.

The company offers liquidity provider and trading services across a wide range of cryptoassets, serving financial institutions and high net worth individuals.

Pros of Cumberland:

• market leadership and years of experience - Cumberland is a part of the diversified core trading firm DRW, founded in 1992. Backed by 30 years of experience, the firm has been building its credibility and expertise in the cryptocurrency market;
• strategic investment in cryptocurrencies - the firm acquired 70,000 bitcoins from the U.S. government auctions of assets seized from the Silk Road trading platform. To date, this stockpile of coins is valued at about $5 billion;
• compliance efforts: Cumberland has actively sought to comply with regulatory standards. In June 2024, the firm received a BitLicense license from the New York Department of Financial Services, allowing it to legally operate in one of the strictest regulatory environments for cryptocurrencies.

Cons of Cumberland:

• regulatory challenges - despite compliance efforts, Cumberland faced legal scrutiny. In October 2024, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the company alleging that it was acting as an unregistered securities dealer. The SEC claimed that certain cryptoassets traded by Cumberland, such as Polygon (MATIC) and Solana (SOL), were unregistered securities. However, as of March 2025, the SEC has announced plans to withdraw the lawsuit , indicating a potential resolution of these legal challenges;
• exposure to market volatility - operating in the cryptocurrency market exposes Cumberland to significant volatility and risk. While the firm's strategic investments have generated substantial returns, the inherent unpredictability of digital asset markets can lead to potential financial setbacks.

Galaxy Digital

Galaxy Digital – is a renowned financial services and investment management company specializing in digital assets, cryptocurrencies, and blockchain technology. Founded by Michael Novogratz, the company operates in various segments including asset management, trading, principal investments, mining and advisory services.

Advantages of Galaxy Digital:

• strong leadership - led by billionaire investor Michael Novogratz, the company benefits from experienced leadership with deep knowledge of traditional finance and cryptocurrency markets;
• diversified business model - Galaxy Digital operates in multiple sectors including crypto trading, asset management, venture capital and mining, reducing exposure to any single segment;
• institutional focus - the company bridges the gap between traditional finance and digital assets by attracting institutional investors seeking entry into the cryptocurrency markets through a regulated and professional approach;
• strategic partnerships - Galaxy Digital collaborates with key industry players and financial institutions, strengthening its market position and expanding its service offerings.

Galaxy Digital Weaknesses:

• regulatory risks - the crypto industry faces constant regulatory scrutiny, and changes in laws or compliance requirements could affect Galaxy Digital's business;
• dependence on Bitcoin and Ethereum - a significant portion of its business revolves around Bitcoin and Ethereum;
• limited retail presence - unlike platforms such as Coinbase, Galaxy Digital primarily serves institutional and high net worth clients, which limits direct participation by retail investors.

GSR Markets

GSR Markets – is a renowned global leader in digital asset trading and market making, founded in 2013. The firm offers a wide range of services, including over-the-counter (OTC) trading, derivatives and market making, serving both new and existing cryptocurrency projects.

GSR Markets Benefits:

• extensive experience and expertise - GSR has accumulated deep knowledge of digital asset trading and market making, positioning itself as a trusted liquidity provider;
• comprehensive service offering - GSR provides a suite of services, including OTC trading, derivatives and market making, tailored to the needs of a variety of clients, from start-ups to established businesses;
• regulatory compliance: the firm has received regulatory approvals in key jurisdictions such as the UK's Financial Conduct Authority (FCA) and the Monetary Authority of Singapore (MAS), enhancing its credibility and reliability;
• in-house technology development: GSR has developed all of its trading software in-house, providing customized solutions that align with its strategic objectives.

GSR Markets Disadvantages:

• average trust rating: some assessments, such as those from Scam Detector, have given GSR an average trust rating, indicating potential concerns about its legitimacy or reliability;
• competitive market: operating in a highly competitive and rapidly evolving market, GSR faces challenges in maintaining its market position among new competitors and changing market dynamics.

B2C2

B2C2 –  is a leading cryptocurrency liquidity provider offering over-the-counter (OTC) trading services and electronic market-making solutions for institutions.

B2C2 Benefits:

• deep liquidity - B2C2 allows institutional clients to access deep liquidity for large trades with minimal slippage;
• competitive pricing - B2C2 is known for narrow spreads and efficient execution, which ensures competitive pricing for market participants.
• 24/7 trading - unlike traditional financial markets, B2C2 operates around the clock, ensuring liquidity and execution availability at all times;
• regulatory compliance - B2C2 has taken steps to comply with financial regulations in multiple jurisdictions, making it a more reliable choice for institutional investors;
• a wide range of assets - B2C2 supports a variety of cryptocurrencies, including major assets such as Bitcoin (BTC) and Ethereum (ETH), as well as other digital assets.

B2C2 Minuses:

• institutional focus - B2C2 primarily serves institutional clients, meaning that retail traders may not have direct access to its liquidity services;
• limited transparency - unlike decentralized funding platforms (DeFi), B2C2's operations are not fully transparent as it operates as a private liquidity provider rather than a public exchange.

How to Choose the Best Crypto Liquidity Provider

Choosing the best cryptocurrency liquidity provider is not as simple and easy as it seems at first glance. Here it is important to take into account several key features, namely:

• reputation and experience of the provider;
• depth of liquidity and trading volumes;
• cost structure;
• list of supported assets;
• API support and additional features;
• regulatory compliance.

Future Trends in Crypto Liquidity

The cryptocurrency liquidity infrastructure is not standing still, but is in active dynamics due to the introduction of technological innovations and regulatory framework, while the digital asset market itself is quite mature and independent.

The future of cryptocurrency liquidity is determined by the following fundamental factors, namely:

• cross-chain bridges, through which different crypto projects can move seamlessly between networks (blockchains), thus solving the problem of fragmented liquidity;
• Omnichain protocols - implementation of these technologies allows pooling of cryptocurrency liquidity from different networks, thus minimizing arbitrage and slippage;
• trading and custodial services - their gradual integration guarantees reliable storage of virtual assets;
• lines of credit and advanced finance functionality - institutional clients have access to new tools such as leverage and trade finance;
• a set of API solutions - they help manage risks in real time and strengthen the competitive position of cryptocurrency market participants;
• automated market makers of a new generation, characterized by dynamic structuring of commissions, concentrated liquidity and hybrid models;
• artificial intelligence for cryptocurrency liquidity management takes the virtual asset market to a new level through predictive market analytics and optimized algorithms for token allocation in pools.

Thus, the cryptocurrency liquidity segment is based on the gradual introduction of tiered solutions in the long term. This will make the market more adaptive and efficient, as well as provide it with regulatory transparency.

FAQs

What is the best liquidity provider?

There is no unambiguous answer as to which cryptocurrency liquidity provider will be the best. You can choose among the top rated providers such as Cumberland, Galaxy Digital, B2Broker, B2C2, GSR Markets. Explore the provider information and reviews to find the best one for you.

What is a liquidity pool?

A cryptocurrency liquidity pool should be understood as a kind of arrangement in which participants contribute their tokens to form a pool of assets. This pool is used on a decentralized cryptocurrency exchange to speed up and facilitate the execution of trade transactions.

How do liquidity providers make money?

The main source of revenue for vendors is transaction fees.