Will Decentralized market making take control the traditional centralized market makers?

 

Market makers stay behind the success of some of the very successful unicorns and almost all cryptocurrency related projects. Market makers' main focus is to steadfastly keep up liquidity, depth decentralized market making, and spread among markets to be able to provide buyers and sellers with the best possible chance to trade a particular 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 example 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  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 healthier income for itself. However, Mango Finance pays this market maker over $6,000 monthly and pays 3% of all tokens sold, which is really a hefty price. Furthermore, Mango Finance is completely determined by the availability of this market maker. Mango Finance also wants to use 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 will see from the above example, automated market makers have been a great help crypto startups, but their services may turn out to be quite costly. This is the reason firms have been searching for market making alternatives and Avatea aims to aid 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 can be activated by staking their native token and a paired token such as BUSD or BNB. Mango Finance is currently able to control their market making activities completely by themselves, choosing and changing the specified volume, price action, and buy/sell orders whenever they want 24/7.

 

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

 

You are able to learn more about the Avatea protocol and how it works here.