Altcoins sit dormant on mid-tier exchanges despite zero-fee push

A liquidity crunch is persisting at South Korea's mid-tier virtual asset exchanges, with a significant number of listed tokens going an entire day without a single trade — even as the platforms waive trading fees in a bid to draw activity.

As of 7:46 a.m. Tuesday, 89 of the assets listed on Korbit showed a 24-hour trading volume of zero won. The problem was already visible Monday afternoon: as of 2 p.m. that day, roughly 80 of the approximately 190 digital assets listed on Korbit had recorded no trades in the preceding 24 hours.

Coinone tells a similar story. As of 2 p.m. Monday, more than 130 of the roughly 360 digital assets listed on the exchange had not changed hands once in the previous 24 hours.

Tokens that rarely trade are vulnerable to sharp price swings even on small orders. When the spread between the best bid and ask prices widens and the last traded price goes unchanged for extended periods, the same asset can command meaningfully different prices across exchanges.

In fact, some tokens recorded daily trading volumes of only a few thousand to tens of thousands of won, meaning even a single small order was enough to move the price sharply. In conditions of thin liquidity, investors who place orders based on the displayed price can also face significant slippage — the gap between the quoted price and the actual execution price.

The divergence in liquidity has produced striking price gaps for the same digital asset across platforms. One asset's 24-hour trading volume reached 428.34 million won ($316,000) on Upbit and 83.13 million won on Bithumb, while the same token saw just 5,000 won in volume on Korbit and no trades at all on Coinone. At the same moment, the asset was quoted at 131 won on Upbit, 129 won on Bithumb, 119 won on Coinone and 105 won on Korbit — a spread of 19.8 percent between the highest and lowest prices across exchanges.

Korbit and Coinone have both recently scrapped trading fees across all listed tokens in an effort to stimulate activity, but trading gaps persist, particularly among less popular altcoins. Cutting fee burdens alone has clear limits when it comes to generating the actual buy and sell orders needed to build genuine liquidity, analysts say.

"Even with low fees, insufficient liquidity widens the bid-ask spread and causes slippage, meaning traders can end up paying more than they save on commissions," one industry official said.

Some in the industry are also calling for a regulatory framework to bring professional liquidity providers and market makers into the market, particularly as corporate virtual asset trading is set to expand.

"There is a need to expand corporate trading in stages and to lay the groundwork for professional liquidity providers and market makers to participate under clear standards and a proper supervisory framework," another industry official said.