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I understand that without high-quality liquidity, trading on the exchange will suffer - users will face delays in order execution, slippage and high volatility. Now I am analyzing different liquidity providers, but it is difficult for me to understand what metrics to consider: trading volume, order book depth, average spread, response speed. I have also heard that some LPs use "deliberate delay" practices or manipulate the market. I would like to understand how to properly evaluate a provider before entering into a contract, are there proven companies with a transparent reputation and what legal aspects should be taken into account when collaborating?
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I think most of the Trading platforms like Uniswap provide liquidity?
I understand your task very well — I launched a cryptocurrency platform last year and also racked my brains over how to choose an adequate liquidity provider. At first glance, it seems that the main thing is volumes, but in practice, stability of execution, minimal spread, reliable API and transparent terms of cooperation are much more important. I compared different options for a long time and eventually came across a detailed article that explains how crypto liquidity providers work and what criteria should be used to select them. Here it is — https://merehead.com/blog/crypto-liquidity-providers/.
It describes the key points: types of providers, how liquidity aggregation works, what to pay attention to when signing an agreement. For example, it really helped me understand that sometimes it is better to choose a hybrid solution than to completely rely on one provider. If you want the exchange to have a really stable trading volume, I advise you to read it, you will really save time and nerves.