June 6, 2022 vladimir

How do cryptocurrency market makers work?

Market makers are high-volume traders that literally

Every cryptocurrency coin or a token needs a market of buyers and sellers in order to move on the exchanges. When the demand for a cryptocurrency asset is low, and supply is high, the price of the asset will be low. 

 

Market makers are high-volume traders that literally “make a market” by always standing at the ready to buy or sell. Market makers essentially act as wholesalers by buying and selling assets to satisfy the market—the prices they set reflect market supply and demand. 

 

The speed and simplicity with which cryptocurrency assets are bought and sold can be taken for granted, especially in the era of app investing and trading. It takes just a few taps to place an order on a cryptocurrency exchange, and depending on the type of order, it can be executed within seconds. Without market makers, however, trading would slow down significantly.

 

If a cryptocurrency asset holder wants to sell the asset, the market maker will purchase it from them. Similarly, if a trader wants to buy a given coin or a token, market makers will ensure that coin or the token are available for sale. Additionally, market makers seek to profit off of the difference in the bid-ask spread.

 

The market making industry has remained mostly centralized, while decentralized finance has been growing extensively. Avatea taps into this new industry and expects all DeFi projects to move to fully decentralized market making protocols. 

 

The Avatea Protocol is designed to enable a decentralized multi-chain algorithmic market making and vesting protocol that provides immense utilities to projects and individuals. The Avatea Protocol can be seen as a token management system, assisting early stage as well as later staged crypto projects.

One of the most important goals of Avatea, is to decentralize market making processes and to offer community governance possibilities to projects. These governance possibilities are aimed at community governed market making strategies and structure. As well as sustainable trading, governing the amount of tokens that are sold or bought by a project, and the liquidity providing details. Avatea thus enables projects to create transparent and community governed activities, from activities that have always remained very centralized. This will create a new decentralized layer to crypto projects and will further improve the trust and transparency of crypto projects.

 

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#Avatea #VATEA #MarketMaking #DecentralizedMarketMaking #DecentralizedMarketMakingProtocol #StakingProtocol

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