Will Decentralized market making dominate the standard centralized market makers?

[Jhon Dolton]

Market makers stay behind the success of some of the 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 possibility to trade a certain financial product or an asset.

Now, let's have a closer look at how market makers work and how they make profit:

Let's use the exemplory case of a new project called Mango Finance. Mango Finance just finished their ICO(Initial Coin Offering) and their token has become tradable on the DEX (Decentralized Exchange) Pancakeswap.

In order to create healthy volume and  an amount action, Mango Finance hired a market maker firm. The marketplace maker creates volume and the firm also sells Mango Finance tokens to be able to generate a healthy income for itself avatea. However, Mango Finance pays this market maker over $6,000 each month and pays 3% of tokens sold, which is a hefty price. Furthermore, Mango Finance is completely determined by the availability of the market maker. Mango Finance also wants to utilize this market maker to offer the tokens of these private investors. For 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 can see from the above mentioned example, automated market makers have now been a great help crypto startups, but their services may end up being quite costly. This is why firms have now been trying to find market making alternatives and Avatea aims to help unicorns and startups with exactly just that.

Mango Finance now turns to the Avatea protocol. Choosing 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 combined token such as for example BUSD or BNB. Mango Finance has become able to control their market making activities completely by themselves, choosing and changing the desired volume, price action, and buy/sell orders whenever they want 24/7.

Mango Finance now pays a small fee to the protocol, this fee is employed to buy back the native Avatea token.

You can find out about the Avatea protocol and how it works here.