Institutional DeFi Enabler? Data Firm Kaiko Probes DEX Liquidity With New Product

Getting a clearer picture of what’s happening within complex realms like decentralized finance (DeFi) is likely top of mind for many investors right now.

Paris-based cryptocurrency data provider Kaiko is meeting that need with the launch of a decentralized exchange (DEX) liquidity pool data feed, measuring depth of liquidity across DeFi majors like Uniswap, SushiSwap, Curve Finance and Balancer.

Trading in traditional finance or on centralized exchanges via APIs provides a window into what’s happening on an order book – something that’s not only missing from decentralized exchanges, but is also quite hard to capture, explained Kaiko product chief Bediss Cherif.

Kaiko, which raised a $24 million funding round in June of last year, already provided trade data for the four main DEX exchanges, which was gleaned from public blockchain transactions. Measuring liquidity and token reserves on platforms like Uniswap involves decoding the programs, or smart contracts, that govern order matching on those DEXs.

“Uniswap [version]3 smart contracts, for example, come with a lot of logic and mathematical rules around the upper boundary and lower boundary that’s actually embedded in the code of the smart contract and not displayed on-chain,” Cherif said in an interview. “In order to produce a proper market data feed, you need to not only capture the data of the event on-chain, but also to completely reverse-engineer the smart contract and its rules.”

As well as deciphering what happens inside a DEX, Kaiko, whose crypto market data was connected with the InterContinental Exchange (ICE) network earlier this year, also saves institutions the headache of having to run an Ethereum node, Cherif said.

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