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Use Cases
Our expertise in liquidity analytics helps investors and intermediaries benchmark and improve their services for the benefits of their clients.
Exchanges | Assess the robustness and resilience of your order book
Challenge
As an exchange, you want to carefully monitor the dynamics of your order book to always provide the best opportunities to investors. But are you getting the information you really need? Do you have adequate analytics in place to follow a real-time view of liquidity, including in periods of high volatility? Do you properly benchmark it or have a clear idea of its resilience under fast market conditions?
Solution
Liquidity, bid-ask spreads and volatility are highly correlated. The more liquidity you provide, especially in periods of volatile markets, the more investors will turn to you, regardless of the commissions level. Our liquidity analytics can help you determine whether your order book stands robust on its own and compared to key competitors. You are better equipped to serve existing investors and attract new ones with a clear and demonstrable value proposition.
" Our mission is to deliver to our customers the tightest spread and the deeper order book.The SUN ZU Lab team helped us with an in-depth analysis of our order book to assess its dynamics and robustness under stress. It helped us tremendously in our commercial presentations. "
Get in touchExchanges | Assess the robustness and resilience of your order book
Hedge Fund | Assess the pre-trade market depth of your execution provider
Challenge
As an investor you naturally want the best execution. What does it mean? Well, it means making sure that you get the best price whenever you buy or sell digital assets. Whether you receive a price over the phone or electronically, how do you know, in the split second where you have to trigger the trade, that it is the best possible price?
Solution
With the market as high as it is today, even a small improvement of 0.10%~0.15% could turn into thousands if not tens of thousands of $in savings. Our liquidity analysis can help you determine in real-time, or historically, whether the price you are getting is the best price available, compared to the aggregate order book of any number of trading venues. Even if you are satisfied with the level of service of your provider, wouldn't it be useful to get a sense of the hidden costs & margin you are paying, if only to be in a better position to negotiate when the time comes?
" We have long been using the same broker, and the question of execution quality has become a recurring issue. Our broker was not equipped to provide pre and post-trade, so we had to turn to SUN ZU Lab to help us understand whether we were getting the best prices. "
Get in touchHedge Fund | Assess the pre-trade market depth of your execution provider
Venture Capital | Benchmark the liquidity of your digital asset portfolio
Challenge
If you are serious about investing in the crypto economy you probably have a diversified portfolio. But do you have a clear idea about its liquidity? If you feel it is time to liquidate part of it, or to rotate away from certain tokens, your ability to do so depends on the liquidity of each token. Even if you have a fair vision of the market today, what will it be tomorrow?
Solution
Our liquidity products can help you monitor the overall liquidity of your portfolio automatically and regularly. We collect microstructure data, compile and analyze it, and we will be able to tell you how long and with what impact your portfolio may be liquidated in full or in part. You can also follow specific assets, and determine when it is the right time to take a profit based on price and/or volume patterns. For serious individuals or institutional investors, liquidity is a serious matter. We are here to help.
" As a crypto investor, I invest in many tokens, often when they are illiquid. It is critical for me to follow the liquidity of my entire portfolio, and market conditions matter: what happens when volatility rises? SUN ZU Lab's analysis helps me understand how market conditions affect liquidity, and enables me to monitor them. "
Get in touchVenture Capital | Benchmark the liquidity of your digital asset portfolio
Hedge Fund | Assess the capacity of your trading strategy
Challenge
Every trader knows that market capacity is a major obstacle. Whether your strategy is fully or only marginally automated, you know that capacity is a key driver of your business, because there is only so much capital you can deploy in the market before "shooting yourself in the foot" i.e. degrading your own returns with a trading activity the market is simply not able to absorb.
Solution
Our liquidity analysis can help you answer that question. Based on your historical trading signals (which we don't need to know anything about) we can assess the price degradation the strategy would suffer for incremental changes in size. You give us the assets, the venues, and based on the data we collect and our quantitative engine, we will help you build the right diagnostic. Should you trade on a new venue? Should you try to access other liquidity pools? What kind of capital infusion can you reasonably accept? We know how those questions are fundamental to an investment management activity focused on getting investors the best possible returns.
" With new investors coming on board, we were wondering on the capacity of some of our strategies. As we didn't have the time and resources to thoroughly perform that analysis, we approached SUN ZU Lab to help us. Their quant team delivered real results in helping us better execute and hence deploy more capital. "
Get in touchHedge Fund | Assess the capacity of your trading strategy
Index Provider | Assess the liquidity of an index
Challenge
Indexing is a popular strategy in the world of traditional finance. It makes a lot of sense because it offers diversification to a broad range of assets and thus reduces overall risk. In addition, management fees for passive indexing strategies are usually lower than fees for active managers, for whom relative and absolute performance are always uncertain over long periods. But how do you know that liquidity is adequate for a given index?
Solution
If you try to invest in a poorly-designed index, you may end up having a massive adverse impact on its components, incurring painful friction costs. Our index liquidity analysis can help you better assess the magnitude of exposure you may take without adverse price movements, thereby keeping friction costs to a minimum. We look at each component in detail, and based on historical data with the highest granularity, our quantitative analysis will determine the acceptable size on each token and the addressable liquidity for the index as a whole. If you are an index sponsor we can produce automated reports for your clients and prospects to help them optimize their investments.
" When our investors asked us about the liquidity of our indexes, we were not equipped to answer them. We turned to SUN ZU Lab, their quantitative team helped us better understand the issues and produce relevant and robust reports that our investors immediately appreciated! "
Get in touchIndex Provider | Assess the liquidity of an index
Asset Manager | Benchmark the liquidity of a token or a digital asset
Challenge
If you are like most investors, you are probably at a loss with so many venues, so many products and so many providers of execution services. Where should you direct your trading activity? Which provider, or combination of providers will offer the best liquidity for a given token?
Solution
Our asset liquidity analysis will help you get a macro view of the market and enable a smart choice. You tell us which asset(s), which venue(s) you want us to scan and we will produce a recurrent historical or real-time report for you to determine where liquidity is the deepest, as well as spot price anomalies when they occur. Whether you are an active, seasoned investor, or just looking for market intelligence to better understand the structure of the market(s) before jumping in, we can help you make sense of it all. Because our research is independent and free of conflict of interest, we have no bias, and make no recommendation. But we provide the value-added data you need.
" As a traditional asset manager we have been wondering about digital assets liquidity. This is important for us to start offering digital assets to our clients. We contacted SUN ZU Lab to get a sense of market activity. We have made great progress in better understanding digital markets and how we can enter them. "
Get in touchAsset Manager | Benchmark the liquidity of a token or a digital asset
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- Pre- and post-trade analysis
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