Market makers stay behind the success of some of the most successful unicorns and nearly all cryptocurrency related projects. Market makers’ main focus is to maintain liquidity, depth, and spread among markets to be able to provide buyers and sellers with the best possible opportunity to trade a particular financial product or an asset.
Now, let’s have a closer look at how market makers work and how they make profit:
Let’s use the exemplory case of a fresh project called Mango Finance. Mango Finance just finished their ICO(Initial Coin Offering) and their token is currently tradable on the DEX (Decentralized Exchange) Pancakeswap.
In order to create healthy volume and an amount action, Mango Finance hired a market maker firm. The market maker creates volume and the firm also sells Mango Finance tokens to be able to generate a wholesome income for itself. However crypto market making firm, Mango Finance pays this market maker over $6,000 per month and pays 3% of tokens sold, which is really a hefty price. Furthermore, Mango Finance is completely influenced by the availability of this market maker. Mango Finance also really wants to utilize this market maker to sell the tokens of these private investors. With this industry maker is charging additional monthly fees.
Mango Finance is losing control over its markets, its private sale investors, and is paying hefty monthly fees for it.
As you will see from the aforementioned example, automated market makers have already been a good help crypto startups, but their services may become quite costly. For this reason firms have already been looking for market making alternatives and Avatea aims to aid unicorns and startups with exactly just that.
Mango Finance now turns to the Avatea protocol. Choosing a decentralized market making bot. By connecting to the platform different market making algorithms become available which can be activated by staking their native token and a combined token such as BUSD or BNB. Mango Finance is currently able to control their market making activities completely on their own, choosing and changing the required volume, price action, and buy/sell orders each time they want 24/7.
Mango Finance now pays a minor fee to the protocol, this fee is employed to purchase back the native Avatea token.
You are able to find out about the Avatea protocol and how it works here.