Cryptocurrency Exchanges and Projects Need Active Markets

This all depends on how much your project’s average volume current is, but as a general rule of thumb we recommend a minimum budget of 10 BTC or BTC equivalent. In most cases, market making with a lower amount is inefficient for our clients and does not provide the desired result. That doesn’t mean we can’t work with less though, and we are not opposed to smaller trial amounts upon initial engagement, but this is our recommended “sweet spot” for best results.

We can integrate with just about any exchange with just about any type of API. We are currently integrated with more than 105 quality API exchanges including the vast majority of the top 100 exchanges according to both CoinMarketCap and CoinGecko.

Market makers should always be trading from their own accounts on the exchanges agreed upon with the client. To comply with basic KYC and AML regulations and to prevent wash trading, market makers should operate with their own accounts, otherwise they can leave the project liable for malpractice.

Potential clients should be wary of profit-sharing or P/L model services. Some market makers will insist on some type of aggressive profit-sharing model — this is not market making. This type of strategy that manipulates the market gives no preference to the health and dynamics of the market and has asymmetric outcomes for the token issuer if things go wrong. Its sole purpose is to make money at the expense of the token’s community. Market makers adopting this model will typically attempt to make income from both the bid-ask spread as well as from a token loan which they trade for profit, often by manipulating the token price. While the gains might be shared, the losses are fully-borne by the token issuer. It should be noted that most reputable exchanges have rules against this type of arrangement, as it works against the retail investor and overall market health. Other market makers will insist on a Profit/Loss (P/L) model. This kind of service will attempt to make money off the token’s bid-ask spread, i.e., buying the token low and selling high. Increasing the spread increases income for the market maker, but reduces turnover (volume traded) for the given asset. The resulting bid-ask spread is larger than if the market making was aiming for maximum liquidity.

To avoid these scenarios, we work exclusively on a retainer fee basis which allows us to operate at a flat P/L and focus instead on increasing market turnover by offering tighter bid-ask spreads. This way our income is not generated from the spread, but rather a periodic (e.g. monthly) retainer.