Market makers stay behind the success of some of the very most successful unicorns and nearly all cryptocurrency related projects. Market makers’ main focus is to keep up liquidity, depth, and spread among markets to be able to provide buyers and sellers with the best possible chance 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 utilize the example of a new 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.
To be able to create healthy volume and an amount action, Mango Finance hired a market maker firm. Industry maker creates volume and the firm also sells Mango Finance tokens to be able to generate a healthier income for itself. However avatea, Mango Finance pays this market maker over $6,000 per month and pays 3% of all tokens sold, which is a hefty price. Furthermore, Mango Finance is totally determined by the availability of this market maker. Mango Finance also desires to utilize this market maker to offer the tokens of their private investors. With this the marketplace 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 above example, automated market makers have already been a great help to crypto startups, but their services may become quite costly. This is why firms have already been looking for market making alternatives and Avatea aims to help unicorns and startups with exactly just that.
Mango Finance now turns to the Avatea protocol. Picking a decentralized market making bot. By connecting to the platform different market making algorithms become available which is often activated by staking their native token and a paired token such as for example BUSD or BNB. Mango Finance is currently able to handle their market making activities completely by themselves, choosing and changing the required volume, price action, and buy/sell orders every time they want 24/7.
Mango Finance now pays a small fee to the protocol, this fee can be used to purchase back the native Avatea token.
You can find out about the Avatea protocol and how it works here.