How Does a CEX'S Decision on Confirmation Depth Influence a Coin's Liquidity? ▴ Learn

How Does a CEX’s Decision on Confirmation Depth Influence a Coin’s Liquidity?

A CEX's decision to require a deep confirmation depth for a coin significantly reduces that coin's liquidity on the exchange. The long wait time for deposits to be credited means that traders cannot quickly deposit, trade, and withdraw, effectively slowing down the flow of capital.

This makes the coin less attractive for high-frequency traders and arbitrageurs. Conversely, a low confirmation requirement increases liquidity but exposes the CEX to higher double-spend risk.

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