Liquid.com is a global cryptocurrency platform using a matchmaking business model to offer trading, exchange, and financial services for beginners and pros traders. Liquid’s user-friendly platform allows customers to buy, sell and trade Bitcoin, Ethereum, XRP and many other cryptocurrencies with fiat currencies (e.g. JPY, USD, and EUR)–bridging the gap between traditional exchanges and simple on-ramps (deposit of fiat into the system and converts funds to cryptocurrency). The platform is powered by blockchain technology to keeps track of all the transactions.
A crypto exchange platform match customer willing to buy and sell crypto and manage their portfolio. Liquid uses World Book–a proprietary software engine–to enhances liquidity and provide price stability on the Liquid cryptocurrency exchange platform. World Book technology matches orders and gives access to liquidity pools sources, through a unified platform where traders and investors can easily buy and sell digital assets. In a product business model that complements the core matchmaking business model, Liquid offers different products and services for crypto trading and related activities.
The company is the world’s largest crypto-fiat platform by transaction volume that is regulated in Japan. Liquid trading platforms exceeded $50 billion in transaction volume in the past 12 months and it appears to be moving towards a global presence. As part of this global expansion plan, the company is planning to launch in the United States.
Liquid’s competitors include Binance, Kraken, OKEx, Bitfinex, Coinbase, BitMex, and Huobi. As of May 2019, the leading cryptocurrency exchanges worldwide by volume are OKEx which had a 30-day volume of $57.3 billion, followed by Binance with $53.96 billion.
In 2014, Quoine (the parent company of Liquid) was founded and launched Quoinex to offer fiat currency to cryptocurrency trading. Co-founders Mike Kayamori and Mario Gomez Lozada raised $100 million through an initial coin offering and launched Qryptos: cryptocurrency to a cryptocurrency exchange. Further to this, they became the first global cryptocurrency exchange to be officially licensed by the Japan Financial Services Agency.
In September 2018, the historical trading platforms, Quoinex and Qryptos, were merged and relaunched as Liquid. It also launched IEO Mission Control, an end-to-end technology solution that offers a safe and secure platform for token issuers and participants. During 2019, Liquid added to credit and debit card deposits, launched Liquid Infinity, and released the Liquid Pro mobile app. In April 2019, the company raised venture funds at a valuation of over $1 billion, making it one of the rare unicorns in Japan. Liquid has secured funding from investors including venture fund IDG Capital and crypto mining giant JAFCO Co, Bitmain Technologies.
Liquid.com has different customers: retail customers, professional traders, investors, and corporates, looking for buying, selling, and trading cryptocurrencies. The platform also includes a network of exchanges, banks, regulators, and investors.
Learn more about the Matchmaking Business Model
You identify two or more customer groups and brings them together in your marketplace.
Engagement — Value Creation Proposition
How Liquid.com creates value for its customers:
Liquid.com offers a one-stop trading platform, which allows customers to access a worldwide network and match trades across multiple transactions and cryptocurrencies. Liquid exchange focus on providing high cryptocurrency fiat liquidity, cryptocurrency stability, quality execution, transparency, and trust.
Liquid users have to go through a KYC process, which involves uploading a national ID, a selfie, and proof of address. Liquid further ensures trust through the two-factor account authentication and data encryption to keep user data safe.
Delivery — Value Chain
How Liquid.com works for its customers:
Liquid.com exchange delivers the transparent cost of trade to both the buy-side and sell-side. The company’s most notable feature is World Book (a proprietary software engine) that enhances liquidity and matches orders on a unified platform. Traders and investors can easily buy and sell digital assets on the platform using Bitcoin, Ethereum, and multiple fiat currencies.
Monetisation — Value Capture
Liquid makes money by charging transaction fees for trading on its platform: traders pay a flat fee of just 0.10% for both maker and taker trades, which can be discounted at 50 % if paid in QASH. Liquid processes crypto withdrawals for free, regardless of which network the asset is using. However, withdrawals are all bundled and executed once a day.
Liquid.com uses the latest technologies to keep customers’ funds safe and to stay ahead of vulnerabilities and exploitation attempts. The company harnesses the power of blockchain technology to keeps track of all transactions recorded within the platform. Even though blockchain suffers from the scalability issue, technology still helps keep the transaction data safe through the use of cryptographic algorithms. In the future, the company should use AI to increase customer engagement, providing to customers personalized solutions, moving from a “matchmaking” to a “multi-sided” business model.
Disclaimer — Written by Nora Fakiri and revised by Francesca Hueller under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. The information contained here should not be used for investment advice and is simply indicates the individual’s understanding of the company’s business models as of April 2020. © 2020