Crypto market making is an essential element for token projects as it brings liquidity to their tokens. This is achieved by quoting both bid and ask prices to ensure there are always buyers and sellers available. This also helps to create a more attractive market for traders and investors which ultimately increases demand for the token.
In essence, crypto market makers are a group of professional trader’s who act as the backbone for order-book based exchanges. They quote both the bid and the ask price (passive offers to buy or sell) of a specific asset on an exchange while aiming for a tight bid-ask spread. This allows traders and investors to easily buy or sell a token at fair prices and with low delays.
As a market maker, you can be involved in any trading pair on an order-book based exchange and make use of all the tools offered by that particular platform. Among them, you can see the real-time order book and the market depth for every pair that you are involved with. This consolidated information reveals the interest of both parties in the token and exposes any resistance zones or order imbalances.
If there is a sudden surge in demand for a token, then the price may skyrocket. This is because there may not be enough supply to meet this new demand. A market maker will help to absorb this new demand by buying the token from sellers, thus reducing the price increase and preventing an overly volatile market.
While it is not a primary goal of market making strategies, crypto projects can benefit from the fact that trading volume is usually an indicator of investor interest in a given token and can potentially lead to organic growth. In addition, a well-managed market maker can help to mitigate the impact of price manipulation by traders.
There are various strategies that crypto market making for token projects can implement depending on the goals of their clients and the characteristics of their tokens. Some of the most common ones include:
Having a dedicated market maker can provide stability and higher efficiency to your crypto markets. This can increase the amount of trades that occur and reduce costs associated with market making such as fees, margin requirements and rebalancing. Additionally, it can also allow you to focus on developing proprietary technology and growing your business while receiving round-the-clock support from our team.
As a leading provider of crypto market making services, Woorton is dedicated to enabling the next generation of digital assets. We are a fully regulated, algorithmic trading desk that is focused on building reliable liquidity for the digital asset economy. Contact us to learn more about how we can support your crypto project with our best-in-class liquidity solutions. We look forward to partnering with you!