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Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies



Tuesday, 8 May 2018






85 Gresham St, London EC2R 7HE Map


Professor Michael Mainelli
Z/Yen Group
Dr. Rodney Green
Z/Yen Group
Bob McDowall
Cardano Foundation





The launch of the report “Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies”, part of a series of exciting projects from Long Finance’s Distributed Futures research programme, was held on 21 March, from 08:45 - 10.45.

Cryptocurrencies are another application of Smart Ledgers. Smart Ledgers are based on a combination of mutual distributed ledgers (aka blockchains) with embedded programming and sensing, thus permitting semi-intelligent, autonomous transactions. Smart Ledgers are touted as a technology for fair play in a globalised world.

There are numerous projects building trade systems using this technology with announcements from governments, shipping firms, large IT firms, and the like. Cryptocurrencies often exhibit high price volatility and wide spreads between their buy and sell prices into fiat currencies. In other markets, such high volatility and wide spreads might indicate low liquidity, i.e. it is difficult to turn an asset into cash. Normal price falls do not increase the number of sellers. Price falls should increase the number of buyers. A liquidity hole is where price falls do not bring out buyers; rather price falls generate even more sellers. If cryptocurrencies fail to provide easy liquidity, then they fail as mediums of exchange, one of the principal roles of money. However, there are a number of ways of assembling a cryptocurrency and a number of parameters, such as the timing of trades, the money supply algorithm, and the assembling of blocks, that might be done in better ways to improve liquidity.

Professor Michael Mainelli, Executive Chairman, Z/Yen Group, remarked, “Liquidity ‘black holes’ and ‘white bubbles’ seem to be a feature of many cryptocurrencies. This research is trying to provide insights on how system parameters and standards might help provide deeper, safer liquidity for consumers.”

The report was sponsored by the Cardano Foundation whose mission is the promotion of developments of new technologies and applications, especially in the fields of new open and decentralised software architectures. Michael Parsons, Chairman of the Cardano Foundation, explained, “Liquidity is the probability that an asset can be converted into an expected amount of value within an expected amount of time. Any token claiming to be ‘money’ should be very liquid. This research should help policy makers look critically at what’s needed to provide good liquidity with these exciting systems.”


Presentation Slides (Click Here)  

 Report (Click Here)


Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies

Date : Wednesday, 21 March 2018

Time : 08:45 to 10:45

Venue : 85 Gresham Street, London, EC2R 7HE


  • 08:45 - Registration opens
  • 09:00 - Introduction & Background by Michael Mainelli, Executive Chairman, Z/Yen Group
  • 09:15 - Liquidity or Leakage – Plumbing Problems With Cryptocurrencies: Report Walkthrough Bob McDowall, Advisor to Cardano Foundation and Dr. Rodney Greene, Advisor to Z/Yen Group
  • 10:00 - Panel Discussion and Questions
  • 10:30 - Summary
  • 10:45 - Networking and Close