Market makers stay behind the success of some of the most successful unicorns and almost all cryptocurrency related projects. Market makers' main focus is to keep up liquidity, depth, and spread among markets in order to provide buyers and sellers with the greatest possible chance to trade a specific 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 exemplory case 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 a price action, Mango Finance hired a market maker firm. The marketplace maker creates volume and the firm also sells Mango Finance tokens in order to generate a healthy income for itself. decentralized market making However, Mango Finance pays this market maker over $6,000 each month and pays 3% of most tokens sold, which is really a hefty price. Furthermore, Mango Finance is wholly determined by the availability of this market maker. Mango Finance also desires to utilize this market maker to sell the tokens of their 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 can see from the above example, automated market makers have already been a good help 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. Selecting 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 matched token such as BUSD or BNB. Mango Finance is currently able to manage their market making activities completely on their own, choosing and changing the required volume, price action, and buy/sell orders every time they want 24/7.
Mango Finance now pays a minimal fee to the protocol, this fee is employed to buy back the native Avatea token.
You can learn more about the Avatea protocol and how it works here.
