Top Crypto Market Makers 2021
The top crypto market makers in 2021 are Kairon Labs, GSR, Alameda Research, AlphaTheta, and Bluesky Capital.
What is crypto market making?
Market making of the crypto space is a new uprising compared to the concept of traditional market markers of the yesteryears. This article serves to provide a better understanding of what crypto market makers do. First, let’s examine what market making is by exploring an elemental understanding of the market making process.
Market making in simpler terms is an activity wherein a trader concurrently provides liquidity to both the parties (buyers and sellers) in the financial market. The market is made by quoting prices while buying and selling the asset.
The need for market makers is strong because it enables them to build efficient financial markets by reducing price volatility with fair-price discovery. Consider the case of any given asset, the difference between the selected best bid and the selected best ask is what is known as the bid-ask spread. If the market liquidity is low, the spread will be wider and vice versa. Liquid markets have a tight spread which makes it cheaper for traders to enter and exit trading positions. The spread is an important part of the overall scheme because it has an impact on the volume traded. If we have to understand it in even simpler words, market makers pave the way for tighter markets.
How?
By ensuring tighter bid-ask spread.
The need for crypto market makers.
As explained earlier, efficient financial markets are the need of the hour. Traders and investors are aspiring to conduct trades immediately, because under normal circumstances finding the right buyer or seller for the same asset, for the same price, wanted by both sides, and at the same time, can be a herculean task. This tends to increase the gap in the waiting time. The higher the waiting time, the higher the trading costs, lower the liquidity levels, and lower the volumes. In short, it is a lose-it-all situation.
Even if there is no immediate counterparty to fulfill your order with the market maker, they still complete your order. Although it could be risky to market makers considering price changes, these risks can be hedged in several ways.
Market makers charge a nominal fee to complete the order. Since the volume of trade is very high, the spread on each asset is high and covered well which ultimately offsets the risk.
They also make use of algorithmic trading tools and automated market-making strategies that act on real-time data.
How crypto market makers are different
Market makers in the earlier years were synonymous with banks and brokerages. But now, market makers in the crypto space have evolved conceptually for the digital asset industry. The new-age crypto market-makers are different from the conventional ones in several ways:
- An extremely active entity that works round-the-clock (crypto markets are always open) with strong monitoring and holds upon little details.
- Crypto market makers are used to deal with low liquidity markets
- The use of blockchain tracking systems to gain deep market insights
- The exchanges have increased in number compared to the stocks that deal only with a few reliable exchanges like NASDAQ.
Market makers do not dictate the price but rather provide orders, reduce spreads, help in the negotiation, strategize, and provide the necessary feedback. A market maker is an expert that understands the working mechanism of order books, technical analysis, and building custom trading software tactics.
It is time we take a look at our top 5.
GSR Markets
GSR Markets fundamentally is an algorithmic digital trading firm belonging to Hong Kong. It makes use of its own software for order execution solutions to several digital classes to offer liquidity. The company is credited with deploying numerous models integrated with over 30 liquidity pools taking their trading fees lowest in the markets.
What sets it apart?
- Great leadership and a robust team of technology and finance veterans hailing from top-notch world financial institutions.
- It has designed intuitive risk management strategies that are engineered for those who find it difficult to manage it.
- Its proprietary trading technology can be modified to the trading needs. Its selling and aggregating strategies adjust to real-time liquidity and volatility so that investors can really get the best price.
Kairon Labs
Kairon Labs is arguably the top market maker in the space currently, certainly in 2021. Based in Belgium they offer market-making for all utility tokens using their in-house proprietary software. Kairon labs has made it to the top of the list as one of the most professional market makers in the crypto space. Famous for its custom enterprise-level algorithms, they understand the value of building algorithms specific to every project. Kairon Labs is pursued as a market maker by some of the best projects out there.
Their experience in building enterprise architecture and designing algorithms for trading has been unparalleled. Their specialty and expertise are in utility tokens, stable coins and now NFTs. In order to extend their expertise, they operate with their own software. The proprietary solutions they have custom-built go a long way in reducing the impact of price fluctuations, and Kairon Labs operates with full transparency and provides liquidity across a plethora of exchanges. They currently possess API connections to more than 120 exchanges.
Offering a huge advantage over their competitors in terms of lower fees, profit split, and algorithmic trading services for digital assets, this makes them extremely attractive to any potential project needing market making. However, they are extremely selective and take their brand reputation very seriously.
What sets it apart?
- The team is comprised of legendary crypto traders who were instrumental in aiding famous projects during the 2017 crypto bullrun.
- The advantage of an in-depth analysis of order books and projects.
- They function in a very pragmatic and precise manner from testing strategies and analyzing them obsessively then deploying market-making strategies that are custom tailored to each project that best fits their individual needs.
- With a 24/7 vigilance, trading strategies can be changed according to the demand of the time.
- Monthly reports about trading volumes, P&L, and direct communication with the project through Wechat, Telegram, and Whatsapp.
- Conference calls arranged every 2 weeks to discuss future strategies.
- Extensive experience, they have worked with more than 60 successful projects
- Cutting edge capabilities, including algos for NFT market making
Kairon Labs is widely regarded as the top market maker in crypto in 2021.
Alpha Theta
Alpha Theta is an upcoming market maker that entered the crypto space with a bang and has made the right kind of noise. Its progress is exponential because of their focus is on the melding between algorithmic trading and bots. Alpha Theta is located in Toronto, and with their strategies customized to the needs accordion to the project needs. The best part about Alpha Theta is that they are gung ho about taking even minuscule projects, build up their reputation, and become big.
What sets it apart?
- Alpha Theta boasts of some of the most talented team of engineers who have generated robust algorithms crafted especially for the crypto markets.
- Alpha Theta is very particular about following AML/KYC policies to maintain compliance in its operations.
- They are hugely data transparent allowing the investors to stay up-to-date with market operations.
- One can utilize n number of bots for executing different strategies across multiple exchanges
- Dedicated trading desks active 24 hours a day
Almeda Research
Almeda Research was first founded in 2017 by Sam Bankman-Fried and Gary Wang and is presently managing above 100 million dollars in assets. They are known for quantitative trading from which it makes a considerable amount of money. However, they have recently diversified into other areas like creating their own OTC trading desk and their new exchange FTX.
What sets it apart?
- Trading advantages based on their deep-set research techniques, market neutral algorithms, and market-making partnerships.
- Sophisticated trading systems to ensure tight OTC spreads.
- Decades of experienced individuals from giants like FB and Google
- Full-scale global operation enabling trading across several exchanges
Bluesky Capital
Bluesky is a quant investment management firm that also has dipped its toes into market making and has been quite successful. It helps HNI, institutional investors, and large ticket offices to achieve their investment goals by deploying their capital in the global financial markets. The firm currently manages a global, macro-level quantitative program.
What sets it apart?
- The firm has a rigorous and proprietary quantitative research methodology as it has invested a heavy amount in disruptive technologies.
- Continuous innovation is the mantra here as the firm is constantly on the lookout for tools and datasets and new sources of alpha.
- Bespoke risk management frameworks that ensure timely monitoring of risks related to investments.
- Provides 24/7 liquidity on the respective cryptocurrency exchanges it has APIs with
Why every project needs a top market maker
Liquidity is seen as an essential ingredient to increase trade volumes so that listing on major and more exchanges is possible. This need is effectively fulfilled by market markers because they aid in creating a market for that token, route the project in such a way that helps it discover its optimal price, and achieve price stabilization for future trading thereby maintaining tighter price spreads allowing investors to put a healthy order for the asset.
Crypto market makers have successfully filled this void especially in times when the crypto markets are evolving at a fast pace. We just hope that this list provides a crystal clear view of the project choices especially for investors who can find out the best providers they can actually work with.
