Crypto Market Making Explained | Introducing TradeBRO
Beginners Guide To Understanding Crypto Market Making
Cryptocurrencies are digital currencies that are cryptographically encrypted and they circulate over blockchain networks. Over the last decade or so, cryptocurrencies have grown enormously and today they have multiple use cases and applications.
However, one of the most common and lucrative applications of cryptocurrencies is trading. Crypto trading has emerged as one of the most potent use cases of digital currencies. In this context, we shall discuss two important concepts — crypto exchange liquidity and crypto market making. Before we delve into the details, let us have a brief look at the concept of cryptocurrency trading.
What is Cryptocurrency Trading?
Simply put, cryptocurrency trading is the act of buying and selling cryptocurrencies with the aim to make profits. Let us consider a simple example. Rahul buys 1 Bitcoin from Raj at the price of $10,000 (take this as an example). He holds it in his wallet. In the meantime, he studies the crypto market diligently. As soon as he notices that the value of Bitcoin has increased to $11,000 (for example), he sells it to someone else. So, he has now made a profit of $1,000 through cryptocurrency trading. Please note that this process happens over crypto exchanges which provide insights and details regarding the dynamic nature of the cryptocurrency market.
Now that you have an idea about the basics of crypto trading, let us understand the concepts of crypto exchange liquidity and crypto market making.
The Concept of Crypto Exchange Liquidity
The liquidity of a crypto exchange reflects the ease and convenience with which digital assets like cryptocurrencies can be bought or sold. In other words, it reflects the convenience of swapping digital asses like crypto tokens with each other or with fiat currencies. Similar to stock markets, crypto markets also achieve liquidity by leveraging order books. Buyers and sellers then place asset orders by mentioning their desired price and quantity. Based on this, a crypto exchange matches the buy and sell orders, thus eventually establishing a price for the concerned asset.
It is important to note that crypto markets do not always achieve liquidity. This is where the role of crypto market makers comes in.
What is Crypto Market Making?
Crypto market making is the process of generating liquidity on a specific cryptocurrency by using bid and ask limit orders on a crypto exchange. Crypto market makers are not investors or day-traders who siphon the market’s liquidity by buying and selling financial instruments at regular intervals. Instead, they are liquidity generators. Crypto market makers make profits by leveraging the market spreads or bid-ask spreads. In other words. This is nothing but the difference between the buying price and the selling price.
Hence, it is clear that crypto market making is a crucial aspect of maintaining liquidity in cryptocurrency markets. However, it is also true that crypto market makers hold the power to manipulate prices and the markets in general. To address, this Future’s Finance has come up with an automated market-making tool named TradeBRO.
Introducing TradeBRO
TradeBRO, a FutureFi product will serve as an alternative to the existing market makers offered by traditional exchanges, thus solving issues related to price manipulation and supply-demand economics. It is currently in the Beta testing phase. Once live, TradeBRO will have the following features:
- Single Trade Window for multiple exchange and accounts
- The ability to connect trades and create volume as per the needs using one single platform or application.
- Multiple exchanges supported with multiple private keys
- Mobile Kiosks for ‘Market Making’ Needs
- One-Stop Hub for professional traders and arbitragers
- Equipped with advanced trading techniques and signals
- Equipped with arbitraging bots and techniques within one single application
Know more about TradeBRO, the crypto market-making tool as the launch date inches closer
