June 6, 2022 vladimir

Why Decentralized Market Making will disrupt the DeFi Space

A market maker could be described as an individual or a firm who provides buy and sell bids on a particular stock, security, options, cryptocurrency coin/token, or other financial assets.

Traditional Markets vs. Decentralized Finance

The market making industry has remained mostly centralized, while decentralized finance has been growing extensively. Short for decentralized finance, DeFi is referred to as financial applications built on blockchain technologies, typically using smart contracts. Smart contracts are automated enforceable agreements that do not need intermediaries to execute and can be accessed by anyone with an internet connection.

DeFi consists of applications and peer-to-peer protocols developed on decentralized blockchain networks that require no access rights for easy lending, borrowing, or trading of financial tools. DeFi has an immensely valuable proposition due to the financial instruments mentioned above that are not relying on intermediaries such as brokerages, exchanges, or banks. There is no need to trust anybody, but users can trust the system, which is called a trust-less trust system.

Avatea’s Decentralized Market Making Solution:

Blockchain and cryptocurrency startups, as well as exchanges, hire market makers in order to ensure there is enough liquidity and depth for trading of a specific asset. This allows traders to easily get in and out of the market. Due to the hyper growth of the Bitcoin price and the crypto asset class as a whole, hiring a market maker has become very expensive which is why startups are actively looking for alternative solutions. 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.

Learn more about Avatea and its decentralized market making solutions at https://avatea.io

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