Institutional DeFi enabler? Data company Kaiko tests DEX liquidity with new product

Institutional DeFi enabler? Data company Kaiko tests DEX liquidity with new product

The data feed provides information on what is happening in the investment pools of Uniswap, SushiSwap, Curve Finance and Balancer.

Getting a clearer picture of what's happening in complex areas like decentralized finance (DeFi) is probably the most important thing for many investors right now.

Paris-based cryptocurrency data provider Kaiko is filling that need with the launch of a liquidity pool data feed for decentralized exchanges (DEX) that measures the depth of liquidity at DeFi majors like Uniswap, SushiSwap, Curve Finance and Balancer.

Trading in traditional finance or on centralized exchanges via APIs provides order book insight - something that decentralized exchanges not only lack but also struggle to capture, explained Kaiko chief product officer Bediss Cherif.

Kaiko, which received a $24 million funding round last June, has already provided trading data for the four major DEX exchanges, obtained from public blockchain transactions. Measuring liquidity and token reserves on platforms like Uniswap requires decrypting the programs or smart contracts that control order matching on these DEXs.

"Uniswap V3 smart contracts, for example, contain a lot of logic and mathematical rules for the upper and lower limits that are embedded in the smart contract code and not displayed on the chain," Cherif said in an interview. "To create a proper market data feed, you have to not only capture the event data on the chain, but also completely reverse engineer the smart contract and its rules."

Kaiko, whose crypto market data was connected to the InterContinental Exchange (ICE) network earlier this year, can not only decipher what happens inside a DEX, but also saves institutions the hassle of running an Ethereum node, Cherif said.

"Since Keiko is connected to the global ICE network, it means that any institution that has a server in an ICE data center can get real-time market data of Uniswap liquidity directly in their infrastructure without running a node," he said.