Provable Transparency and Trading on LGO: What, How and Why ?
LGO was created with the ambition of bringing a transparent fair and secure environment to allow any kind of investors to trade digital assets.
To do so, we developed a proprietary technology using cryptography and blockchain to build tools which allow us to solve the following problems by design, without compromising the speed and efficiency of our trading platform. One of these tools was presented in our initial whitepaper as an “anti front-running” module. It is actually much more than that, which is why we’ve renamed it our transparency module.
We have released on April 16th, 2019 the LGO Node, which allows anyone to verify the orders and trades executed on LGO thanks to the blockchain technology. This tool is open source and is documented here.
The problems LGO solve
Problem #1 Data Authenticity
Trade data on LGO is provably transparent and authentic. Market participants can utilize LGO trade data with the assurance that it has not been corrupted.
Problem #2: Market Manipulations
LGO’s Transparency Module (described below) prevents front running or market manipulation from the exchange.
Manipulative activities by market operators in the cryptocurrency space have plagued the space since its early days. Our technology prevents us from front running our clients.
Problem #3: Inequitable trading
Our platform is built as a level playing field: whatever the technological infrastructure of our clients, they all have access to the same trading experience and the same information.
LGO Transparency Module: how it works
Signing and authenticating each order by the client
Clients sign the orders they place on LGO with a cryptographic key. Here, an order represents a trade order, but also — and more importantly — a withdrawal order.
By doing so, LGO can link an order to a trader, hereby confirming that trades are effectively done by the right clients. The confirmation of the trade is included in the trade itself which allows our clients to be sure that the right trades are processed on their behalf.
Withdrawal orders are all authenticated: this prevents an attacker to place a withdrawal order on LGO on behalf of the client and steal the funds from the clients.
Encrypting order content before it reaches LGO’s engine
Before reaching the LGO platform, orders are encrypted by a third party encryption key and the hash of the order is sent to the Bitcoin blockchain. When the hash is sent to the blockchain, the decryption key becomes available to LGO which then decrypts orders and sends them to the matching engine. This process is executed in less than a second.
Using blockchain as an audit trail
All orders sent to LGO are pooled, hashed and stored in the Bitcoin blockchain. This creates an audit trail of all orders, which allows anyone to control that trades, volumes, prices and data are correct.
We have designed a tool to use the blockchain data to compute the trade and order history. This tool is available here.
LGO Transparency Module : User Impact
Signature of every order
As mentioned earlier, all orders (trade / withdrawals) have to be authenticated and signed with a client specific key. This key can be held by the client in two ways:
- Hardware wallet: when placing orders on our desktop app, clients use a Ledger Nano S to sign and authenticate all orders.
- Hardware Security Module (HSM): when placing trading orders on the API, clients use an HSM to sign and authenticate all orders.
When first trading with LGO, clients need to have a Ledger Nano S and/or use our software HSM. More details in our API documentation.
Level playing field for any participant
All orders are encrypted, batched, hashed and decrypted. Orders are executed by batch, in less than a second. Within a batch, orders are executed on a price-time priority.
This has 2 impacts for LGO clients:
- The order book gets updated periodically rather than on an order by order basis
- Regardless of their infrastructure, clients have access to the same latency
Rather than being updated with every trade, the LGO order book is updated by batch. High, medium and low-frequency traders have access to the same information feedback regardless of their technical infrastructure. This is the basis of a global market, with fair and direct market access for all types of investors.
The value of the LGO Transparency Module
- 100% demonstrably transparent price, volume and trade data
- All orders are authenticated by clients prior to execution
- No front running and market manipulation from LGO
- All traders have access to the same level of service
LGO Markets is a compliant, transparent, and non-custodial digital asset trading platform designed for institutional investors.
_ If you are a trading business or a financial institution, please fill out this form and/or contact our sales team (firstname.lastname@example.org).