MARKET MAKING FOR TOKEN ISSUERS 101
You had a great crypto idea and managed to assemble the best team, overcome the most complex challenges, and now you are ready to launch your token. However, you still face two big challenges – how to get and stay on a centralised exchange. Here is where market making and we come to play. But let’s dive into the basics first.
What is market making?
Market making is a trading strategy that involves placing buy and sell orders for security to create liquidity and facilitate trading activity in the market. In the context of cryptocurrency, market makers are traders or firms that actively buy and sell cryptocurrencies in order to provide liquidity to the market.
Market makers play an important role in the cryptocurrency market because they help ensure that buyers and sellers are always available for a particular cryptocurrency. This is especially important in the cryptocurrency market, which can be highly volatile and prone to price swings. By constantly buying and selling cryptocurrencies, market makers can help to smooth out these price movements and make it easier for other traders to buy and sell cryptocurrencies at more stable prices.
Market makers typically use algorithms and other automated tools to analyse market data and identify opportunities to buy and sell cryptocurrencies. They may also use other strategies, such as providing liquidity to the market by placing large orders that are unlikely to be filled immediately, in order to help stabilise the market and maintain orderly trading.
Overall, the role of market makers in the cryptocurrency market is to help facilitate trading activity and provide liquidity to the market, which can help to make it more efficient and stable.
OK now I know what market making is, but how can Orcabay help me as a token issuer?
As a token issuer, it is important to have a market maker in place when getting listed on a centralised exchange. This will ensure that there is trading activity from the start and prevent the risk of delisting due to inactivity. Our market-making solution allows for fully customizable bid-ask spreads, order levels, order amounts, and inventory management to meet the needs of token issuers. We provide:
Improved order book liquidity
Order book liquidity refers to the depth and width of the order book, which are measures of how much of the asset is being traded at different price levels.
The depth of the order book refers to the total volume of buy and sell orders at each price level. A deep order book means that there are a large number of orders at each price level, indicating high liquidity. This means that it is easy for traders to buy or sell the asset because there are many orders to choose from, and the asset can be traded in large volumes without significantly affecting the market price.
We make sure that your order book has many price levels with different amounts which allows for price discovery to happen. This recurring process pushes the price to the correct equilibrium.
Lower bid & ask price spreads
The bid-ask spread for a security is the difference in the price that someone is willing to pay (the bid) and where someone is willing to sell (the offer or ask). Tighter (or lower) spreads are a sign of greater liquidity, while wider (bigger) bid-ask spreads occur in less liquid or highly-volatile stocks.
24/7 market making on an unlimited number of trading pairs
Christmas? Thanksgiving? No worries, we are always in control of market making no matter the number of trading pairs you have.
Monthly liquidity statistics report
Our experts will provide a detailed monthly liquidity statistics report so you will have accurate insight into how your token is doing in the market. Additionally, our experts will help answer any questions and discuss any results that you would like.
We are always there for you. Our team of experts will make sure that everything will run smoothly, but if there are some unexpected difficulties our technical support team will make sure it is dealt with.
This is exactly what I am looking for! What are the next steps?
The whole process of a market making service for token issuers is straightforward. The process can be divided into 5 steps:
- Step 1: Schedule an introductory call for our token market-making service. Our team of experienced market makers with proven track of records will introduce you to the whole process and answer any additional questions you may have
- Step 2: Receive and sign our market-making service agreement
- Step 3: Provide limited trading API access to your accounts. But don’t worry Orcabay does not require withdrawal rights, so you can relax.
- Step 4: Provide an inventory of capital for market making. This is essential for us to be successful at market making
- Step 5: Receive monthly reports on token volumes and liquidity from our experts
To sum it up, if you want to get it listed on a centralised exchange, it is crucial to have a market maker from the start. This will ensure that trading activity begins as soon as the token is listed and prevent delisting due to a lack of trading activity. At Orcabay we are experienced market-makers on whom you can rely.