If you are planning on launching your own cryptocurrency, a market maker is the first thing you should think of!
The majority of ICOs are infamous for having low liquidity. The fact that it is overseen by unique organizations is something that the crypto world does not frequently acknowledge. These organizations are known as crypto market makers and liquidity providers, and they are the ones who operate any token and crypto exchange in the background to increase liquidity, decrease volatility, and guarantee its long-term growth.
What Is a Crypto Market Maker?
In the digital currency market, the role of market makers is similar to traditional market makers. These companies provide liquidity to exchanges and hedge funds. By quoting bid and ask orders on exchanges, market makers can improve overall market efficiency. They usually make their money by collecting large positions during periods of imbalance and then unloading them at more advantageous prices.
Market makers are typically employed by exchanges, and they quote bid-ask prices of an asset throughout the day in order to keep spreads below a maximum limit, a minimum depth, and to retain orders for a minimum amount of time. Simply said, market makers ensure that the exchange keeps its competitiveness and can draw traders.
Although one of the responsibilities of a crypto market maker is to maintain market liquidity, this is a difficult task given how unpredictable the crypto market is.
Why Do Startups Need a Market Maker?
Crypto market-making is vital for ICO issuers and investors alike. Market makers work as a middleman between ICO issuers and investors. These intermediaries help ICOs get listed on exchanges and attract investor interest.
Despite the high volume of the market, the success of an ICO depends on many factors. Its popularity is a reflection of how the project is doing and how much interest there is in the product.
Consider the following scenario: You visit the market to purchase a token and observe a $2,000 daily trade volume. This particular cryptocurrency is available on five other exchanges, although their prices are very different. For investors, the first and second moments immediately raise caution flags.
Hiring a conventional market maker is one of the worst errors that cryptocurrency entrepreneurs make. People frequently enter into long-term contracts with conventional market makers, but instead of receiving liquidity, they suffer serious financial losses and breach of community trust. Traditional market makers, in contrast to cryptocurrency ones, just strive to maintain a tight spread without increasing trading volumes.
When Should Projects Hire a Market Maker?
Usually, joining a liquidity provider is best done at the tokenomics stage. The problem is that entrepreneurs nowadays tend to focus more on creating a product, its concept, and its value proposition than on how it will survive in the future. When they eventually reach market makers, it becomes apparent that their original vision does not align with the circumstances of the marketplace and that a new strategy is required.
Because of this, early project development is when the team should consult with a crypto market maker so that the tokenomics can still be changed.
How to Choose a Good Market Maker?
Any tokenized initiative that doesn’t have the ongoing assistance of a market maker cannot exist in the market. However, how can you pick the best one?
- Experience: In a market as new and fragile as the cryptocurrency industry, having a staff with extensive industry knowledge and hands-on experience means that your project will receive more high-quality solutions and the competence it needs to succeed. It is best to remain with a reputable business that is skilled at what it does.
- Achievable goals: Setting reasonable expectations on both ends is essential for a successful market-making relationship between the market-maker and the client. Both parties must improve communication if their efforts to make the market and achieve the goals of the founders are to be coordinated.
- Clear and simple reporting: Every business partnership must have transparent charges, open communication, and detailed reporting. You should specify what a market maker is responsible for and provide your expectations for the project’s success before signing a contract.
- Any startup will benefit from a network of interconnected exchanges and cryptocurrency market makers with a large network of partners. They are able to aid in the listing of your project and will offer continuing assistance before, during, and after the launch.
BitQuant Is Bringing ICOs to The Next Level
BitQuant is a group of skilled algorithmic traders with extensive knowledge of market making, liquidity provision, and liquidity management. What distinguishes us from our competitors? – We, however, go much beyond what most people believe market makers to be.
You’ve come to the wrong spot if you’re seeking for a market maker who will implement your instructions without thinking. We think that a competent liquidity provider ought to be heavily involved in the project’s digital marketing plan in order to coordinate efforts on both sides and make required adjustments in a timely manner.
We utilize the greatest market maker software and have a thorough understanding of every facet of the cryptocurrency market to satisfy the needs of our customers. We are able to create the best market-making solutions to satisfy the needs of our clients thanks to our extensive understanding of cryptocurrency trading and years of expertise.
We have successfully launched 12 tokens and have been providing our customers with liquidity 24/7/365 since 2019.
We have established connections with numerous liquid cryptocurrency exchanges, such as Binance, Gate.io, KuCoin, and others.
Entrusting your liquidity requirements to a reputable crypto market maker will help your project develop faster.
Call us today, and we’ll work with you to determine the best way to meet your liquidity needs.