Liquidity is an important aspect in crypto trading with liquid markets recording a high transaction volume and clients being able to trade cryptocurrencies at any given time without lack of pairs or volume.
Liquid markets have a tighter spread making it cheaper for clients to enter and exit trading positions. More sophisticated investors who are proficient in technical analysis are likely to prefer markets that have tighter spreads because these kinds of markets are more predictable and so their analytical strategies are more reliable for them in such a market compared to one with a large spread.
As discussed in our primer article about liquidity, large orders will likely have lesser impact on price swings in a liquid market than in an illiquid market. This means more confidence for investors.
Besides, crypto exchanges interested in listing new tokens will likely prefer tokens that are backed by teams with strategies in place to sustain and improve organic trading volume and higher liquidity. Besides, sustaining a large volume is crucial to have the token remaining listed and avoiding de-listing from an exchange.
Among the many benefits of having a market maker is being able to support volumes of a platform (say a crypto exchange) and token until the trading volume grows to not require any further market making and when that volume is increased,a cryptocurrency project such as an exchange or token might become more visible and for a token/cryptocurrency, the token/crypto demand would increase, causing a further increase in price. With a significant trading volume, your crypto project looks a live and you can forge more partnerships.
Market makers not only prevent illiquidity but also prevent volatility for a given token and for a cryptocurrency exchange or a trading platform, higher liquidity allows for instant transactions for traders who are coming to buy and sell on the platform because what they are looking for is readily available. They do not have to wait until a matching buyer appears to buy or sell what they are looking for, which is what makes it hard for new exchanges and trading platform to sustain markets.
Market makers, however, do not dictate price of the assets. They act to provide orders, reduce spreads (price difference between bid and ask prices), set up listing strategy, assist in negotiating with exchanges, and provide feedback on a project's marketing efforts.
Market making is not merely running a trading bot. A market maker is specialized in understanding order books, technical analysis and building custom trading software as part of the strategy, but should also understand and consider macro conditions before implementing the strategy.
Here's a list of market makers.
GSR Markets is originally an algorithmic digital trading firm based in Hong Kong and which uses proprietary software to offer liquidity and order execution strategy solutions to multiple digital asset classes and cryptos and other platforms.
The liquidity sourcing is based on the relationships the company has created since the company started in 2013. So far, the company has deployed hundreds of models and is integrated with over 30 liquidity pools and they say that their trading volumes afford the company some of the lowest fees schedules in the market. Currently, the company provides services such as physical token trading and margin trading on both tokens and futures, and its clients include new token issuers, security token issuers and multi-billion dollar projects.
GSR Markets was among the first market-makers on the Ripple's Consensus ledger and integrated with Bitstamp, U.S.-based Snapswap, Japanese TokyoJPY, Korean Paxmonata, Brazil Rippex and Fidor Bank in Russia in 2014. They then integrated with Bitso (Mexico), Gold Bullion International (US), Gatehub (EU) in 2015 and in 2016 expanded integration with 6 more digital asset exchanges and developed statistical exchange arbitrage strategies.
The company supports market making and OTC trading through complex trade orders including over-sized and specialized orders and are responsive to assets acutely affected by the media and world events. GSR is currently integrated with a number of digital assets and cryptocurrency exchanges to provide these liquidity solutions on a global scale.
Since the team is experienced in providing market making, the company provides custom made solutions such that it works with companies to tailor trading strategies to their requirements, needs and goals. On a global scale, the company platform is integrated with about 15 digital asset exchanges. Last year, the company expanded from physical token trading to margin trading on both tokens and futures.
The company has a team who have previously worked at Goldman Sachs and IBM and who have decades of experience in finance, quantitative investments and trading technology. They are also trained in business, math, computer engineering, and law from schools such as M.I.T. and Columbia. The company is one of the founding members of the Association for Digital Asset Markets (ADAM) which is an organization that aims to create a fair and orderly marketplace.
Kairon Labs is based in Belgium and the Netherlands and offers market making for all utility tokens, and like GSR described above, use proprietary trading software.
Kairon is currently in talks with exchanges to start working direct with them.
Not only do its managers possess academic qualifications in informatics, business management, finance and insurance, but also have experience in enterprise architecture in the banking industry, developing trading algorithms, financial advising, and trading.
Coin Flow is a crypto market maker based in Hong Kong and it provides designated market making, exchange market making, and ICO Advisory services for token issuers, exchanges and other platforms. It currently is offering market making services for top 100 coins. Their trading software is in-house built and provides 24/7 automated monitoring.
The team is diversified and experienced in investment banking, high-frequency trading, software development, business development, and communications. According to its website, the company is ethical and compliant and has put into place strategies to prevent money laundering, terrorist financing, and other financial crimes through corporate governance and AML policies.
Keyrock.eu employs in-house developed algorithmic trading bots and high frequency trading infrastructure and industry expertise to provide market making and liquidity to crypto ecosystems. This means the company is able to build a more efficient, stable and accessible market.
Keyrock builds markets by following four principles including building scalable technology such as building infrastructure systems, APIs, and use of algorithm logic that can run on any exchange or liquidity landscape. The second principle is acting morally and it does not create fake volume or work under price target systems. Instead, it focuses on building a market, responsibly.
Transparency and provision of abundant data is the third principle and it uses data for building products and for decision making. Risk management is the fourth principle through which Keyrock aims to create confidence, engage a community and allow each and every individual to participate in a vision.
Its technology is currently integrated with major cryptocurrency exchanges for purposes of providing liquidity. In addition to the above services and principles, the company provides its clients with transparent data to let clients follow the operation and general health of their markets, tokens etc. Keyrock also offers advisory and support regarding exchange listing and tailor-made developments as per client's token economics. The data from the company's monitoring systems is able to tell about the performance of a client's API and crypto markets. Besides, clients can build and launch scalable strategies using the company's modular technology.
Wintermute Trading creates liquid markets for ICOs, listed crypto projects and cryptocurrency exchanges. It currently connects to more than 100 crypto exchanges and has established relationships with the main exchanges.
For ICOs, ITOs, or STOs, token issuers are able to use the company's service to create liquidity for their ICO at public sale. The company works with issuers to first understand their objectives and requirements before developing workable strategies based on the project's defined and custom liquidity parameters, and it can also help token issuers to list on the right exchanges. The company also facilitates any off-exchange blocks between current and new investors and they can also facilitate secondary crypto exchange listings.
Owners of already listed token projects can integrate Wintermute to support liquidity for the listed tokens or to facilitate their secondary trading (help a token project to list on secondary crypto exchanges) as well as to get liquidity at milestone events (such as product launch or a large customer onboarding). The company can also assist listed projects to restore lost liquidity and therefore to avoid de-listing from exchanges and platforms.
Besides, the fee model is performance-based, meaning clients pay when their objectives have been met. In addition to creating custom trading strategies, the system tech also monitors trading activity. Wintermute employs proprietary trading algorithms that it says are developed by their in-house engineers based on their 30 years of experience at world's leading high-frequency trading firms.
Hummingbot allows to run high-frequency market making bot and automation of crypto trading. It is not only open-source and therefore free and auditable, but can also integrate with decentralized exchanges such as DDEX and Radar Relay in addition to centralized exchanges to provide them with market making services and liquidity.
Currently, it supports these two decentralized exchanges plus Binance.
The integrated market making bot will generate automated, high frequency trades and quote prices on different exchanges. It will generate profit for itself arising from the bid-ask spread and price dislocations between markets. Using the bot, crypto exchanges are able to use the technology to not only create and maintain liquidity but to also create competitive spreads for the listed and to-be-listed tokens.
Platinum Securities offers liquidity and market making solutions for STOs, IEO, and ICOs and assistance for tokens to list on the top 10 exchanges and to access liquidity and solid trading volume. For its clients, Platinum will ensure that the bid/ask spread is less than 1% and that there is a refined and solid liquidity strategy. The company is currently providing support and consulting for more than 400 token projects.
The company also allows clients to directly supervise funds utilized in market making in order to remain transparent.
The company offers free consultation about how you can create liquidity for your ICO, it offers free integration of tokens to new crypto exchanges, and the transfer of service between exchanges in case a token is listed on the new exchange. With some arrangements or depending on the type of service to the client, a client can get monthly reports and personal account manager.
Scavenger Bot trades Bitcoin on crypto markets to make profits on spreads regardless of whether BTC price is falling or rising. It can be integrated with an individual trading account as a trading bot to earn the account owner profits based on spreads and it can automatically close sale or buys on orders.
The bot does not have any upfront costs but charges 15% of all profits made by it from automated trading. The owner of the account is invoiced weekly based on the daily profits made for them by the bot. The platform launched closed beta in September last year.
CyberX was founded in 2016 by veterans from Wall Street banks Goldman Sachs, UBS, Merrill Lynch, top tier funds Citadel, AQR, Blackrock, GSA and Tech leaders Google, Baidu, and Thomson Reuters. Its founder also co-founded the first cryptocurrency wallet company in China, Bihang.com, which was acquired by OKEx crypto exchange.
The company, according to their website, is building a platform that will provide "full range of financial services to token issuers, institutional investors/token funds, exchanges, and high net worth clients."
The services it provides include market making to provide liquidity for exchanges and platforms on a 24/7 basis on all levels of market. The service will finally support all major exchanges including futures exchanges; it provide order book depth and maintains bid/ask spread; offers guard against informed traders, offers cross-exchange triangle arbitrage; and monitors markets to identify abnormal trading behavior based on quantitative analysis.
It also provides both passive and active asset management, arbitrage (Cross Exchange Arbitrage, Cash and Futures Arbitrage, and Statistical Arbitrage, Cross Token Arbitrage, Calendar Spread Arbitrage and Event Driven Strategy). The company also provides OTC Trading using a wide range of Algos for ITC Block Trade, access to liquidity pool due to its large network, and has worn numerous Algo Awards in Asia.
CyberX's trading platform is designed for institutional clients and lays emphasis on algorithmic trading intelligence, profit maximization, low latency, high reliability, account security, block chain data analysis and multi-class crypto asset support. Its platform can be installed locally on client's machines and network and can connect to exchanges directly but API does not leak information to third parties.
The trading platform supports trading algorithms such as TWAP/VWAP and other advanced algorithms. Using the algorithm, users are able to hide trading intentions, reduce trading cost, minimize market impact in addition to preventing information leakage. The platform also supports automated order execution with fully configurable parameters and indicators on a 24/7 basis.
Crypto Market Makers
While some market makers and liquidity providers mainly use automated trading, Crypto Market Makers uses both manual and algo trading strategies. The company is experienced in providing liquidity to exchanges and tokens of all types and kinds at a fee rate of 10 BTC per month and 75% of that goes towards the actual order books. This ensures that any crypto and token the company is providing with liquidity is actively being traded and is maintaining high volumes in markets to derive other benefits such as being preferred by other exchanges for listing and to gain more publicity.
B2C2 was started in 2015 and is based in London. They are a cryptocurrency market maker providing services to brokerage firms, exchanges, banks and cryptocurrency funds around the world, both for major and other cryptocurrencies and fiat currency pairs.
As such, it provides liquidity, on a 24/7/365 basis, for Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple, and Ethereum Classic in USD, GBP, EUR, JPY, SGD, AUD, CAD, CHF and more. It also provides instant execution with post-trade settlement, and its clients can buy and sell cryptocurrencies on a 24/7/365 basis through the company's APIs and web platform. Besides, the company can stream prices, offer FIX connectivity, and plug and play connectivity comparable to existing OTC FX market, and also multicurrency expertise.
The company has so far traded tens of billions of dollars since 2015 across a wide range of crypto and local currencies, including USD, EUR, JPY, SGD, CHF, and Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash, and more. It also offers flexible trade sizes including OTC business services from small algo trades to multi-million dollar blocks.
Atomic Fund develops trading strategies that are relevant to projects and utilize fast computer programs developed by the team, to help companies outsourcing market making and liquidity services.
The company employs dynamic exchanging which is a strategy where a client benefits from value developments on a transient stock outline. The value of the developments over the long haul will exceed the value developments for the time being. This technique also relies on different strategies used to achieve it, including statistical arbitrage (also called stat arb) where there is simultaneous buying and selling of security portfolios according to predefined or adaptive statistical models. It is also applied in trading other financial market assets such as equities, commodities and now cryptocurrencies.
It is also applied by hedge funds, mutual funds, and proprietary trading firms to build, test and implement trading strategies. The other strategies employed are technical analysis, HFT and market maker strategy.
Hashcash Consult is a blockchain powered forex and digital asset trading platform that allows banks to access liquidity in geographies with no nostro relationships. Banks can use the market maker to settle in a variety of assets in real-time such as the platform's native asset HCX, fiat currencies (Euro, USD and others), cryptocurrencies (such as BTC, ETH etc), central bank issued cryptocurrencies.
The bank which is doing the settling does not need to have any relationship with a bank in that region. The HC Market Maker automatically picks up the best available forex rates for a certain currency pair to do a forex settlement.
Exchanges and banks can also use HC Market Maker to place fiat currency and digital assets Forex deals. For instance, a bank can put out Forex deals in the HC open market place for participants to pick up. Currency exchanges, banks, wallets and cash out providers can also use the market maker tech to extend their deals and expand their markets.
Those utilizing the HC Market Maker are able to benefit from accessing an open forex marketplace where they can place and access orders, they can access new markets, and they are able to get better rates when remitting to a currency the exchange does not hold.
Genesis Trading provides liquidity solutions for high networth individuals and institutional buyers and sellers who want to buy and sell digital currency. It currently supports BTC, ETH, ETC, BCH, XRP, LTC, and ZEC. Genesis has a network of trading partners who assist in providing deep liquidity with same-day settlement-ability and expedited settlement. However, the minimum transaction is to be worth $75,000 and Genesis does not provide custody on behalf of counterparties.
Genesis Trading is currently regulated as a security by the FINRA & SEC and has a Digital Currency – NYS DFS BitLicense.
The platform has also managed billions in transaction volume since starting in 2013.
Bankex runs a CryptoMarket Index, provides Asset Management, and market making for tokens in order to meet different exchanges' goals, technical, as well as financial audit of exchanges, test of API functions for professional players, load-testing.
In market making, the company places a given volume of buy and sell orders and bids with a certain spread, where the volume, spread and other order parameters are determined by agreement with the client. It will set up and manage complementary trading algorithms with the motive of achieving best possible results at optimal cost to the client.
For market making, the company is able to place orders on a 24/7 basis under the supervision of the traders on duty. The order execution is done by using complementary trading algorithms configured and managed by the traders, and in addition to using trading and market making tech (expected in future), the company's team will manually monitor the processes.
The company partners and connects to multiple liquidity sources and is able to instantly route and execute large orders via its proprietary APIs, depending on the volumes and spreads and other parameters as agreed with the client.
Professional liquidity management and volatility smoothing for serious players is provided by use of real traders without bots. The company also provides consulting for listing on crypto exchanges leveraging the team's knowledge and experience in this field.
Market making creates a busy market for a token after listing of that particular token on an exchange and increases the speed of transactions while reducing transaction costs for investors. BCN Market Making allows the company to make the market such that there are quotes present even when no other participants in the market are willing to trade orders. The company makes markets and trades at its own capital at BCN crypto trading desk, where transactions for buying and selling securities including crypto currencies occur.
Bankex asset management gives individuals and institutions exposure to and opportunity to invest in traditional and alternative investments across all major asset classes. Its products include active and passive funds, structured products, tracking portfolios, and quantitative portfolios. In creating asset management strategies, the company considers factors such as balancing between crypto and fiat capital (they create a balance between the two), opportunities and risk, return to client, costs to client, crypto and liquidity preference.
Bankex also provides prime brokerage services to let clients transact cryptocurrencies across exchanges and dealers while maximizing operational and margin efficiency and reducing transactional costs. They provide cross-product portfolio margining solutions for their clients tailored to the clients' trading exposures and to help clients reduce counterparty exposure risks when dealing across multiple bilateral OTC trading arrangements.
The company also runs a fiat-crypto exchange that allows clients to convert fiat capital into cryptocurrency.
Pulsar Trading defines itself as a high frequency trading market making and over-the-counter trading experts. It uses algorithms and technologies to assist in market making and provision of liquidity, and has done so for the digital markets since 2014.
According to the company's website, it is currently providing these services to more than 50 crypto exchanges for over 300 crypto-assets and has managed a trading volume of over $1 billion USD. In addition to market making, Pulsar also provides OTC Trading and proprietary trading.
For larger orders or crypto OTC trades, the company uses Pulsar Liquidity as its desk for OTC block trades where investors can tap into the company's deep liquidity pools, and it has now provided this service for 14 years. It has a pool of partners from who projects can draw round-the-clock uninterrupted supply of liquidity during times of demand.
For market making, the company provides services to ICOs, listed token projects, cryptocurrency exchanges and other crypto platforms/projects. It employs a customized liquidity strategy to meet client's goal.
The company is constituted by a team of professional algorithm traders who specialize in quantitative and high frequency trading. Combined with their trading acumen, use of algorithm helps the team to identify and capture trading opportunities on a daily basis. As early movers, the company has experience in serving market making industry, provides services for diverse asset classes, and packs in loads of know-how in crypto trading.
Prycto provides market making as a service by securely connecting to exchanges, custodians, wallets, and liquidity pools to automate trading and provide market making at scale. Blockchain and crypto ecosystems and platforms can employ the firm's OTC API to scale their OTC trading with access to more liquidity and faster OTC order execution. Clients can also use the technology to automate the whole OTC process.
Clients using the technology will gain real-time price discovery and historical data on active digital assets and price feeds to accelerate trading of crypto assets.
The company assists token and crypto issuers, trading firms, blockchain projects utilizing tokens and crypto, cryptocurrency exchanges, dApps and broker dealers alike. For instance, it can assist asset issuers to get listed on more places and to improve their trading conditions for their digital assets.
With Prycto, trading firms are able to access infrastructure needed for fast and secure high velocity trading of digital assets while crypto exchanges can get market making services for any token and guaranteed liquidity for any listed token. DApps are able to get liquidity and broker dealers can use Prycto to instantly access digital asset classes with full liquidity and ecosystem support.
Snap Innovations provides market making for companies such as COSS.io exchange following their last year partnership. The company provides market making against the majority of their listing on the COSS exchange. This increases the overall market efficiency on the exchange.
In addition to market making by using bid-ask orders, Snap Innovations assists projects in their client on-boarding processes for instance in order to ensure more quality projects are listed on exchanges and crypto platforms.
Empirica.io provides proprietary algorithm engine for market making. The algo has direct access to major crypto exchanges and traditional markets. The company has experience in providing liquidity for capital, derivatives, forex and cryptocurrency markets and has been providing those services since 2011. Empirica.io software can be run locally on client's machines or run via cloud and integrated with exchanges.
Using this proprietary algorithm, market makers or liquidity providers are able to customize their strategies by adjusting different parameters (such as spreads, volume, risk, reference prices, midpoint calculation) in order to for instance set the spread, aggressiveness, inventory management and hedging. This means liquidity makers are able to avoid black-box liquidity algos that they (liquidity makers) can't control and build their own from scratch. They (liquidity makers) can build to expand application of these algos with their developer or developer teams or source help from Empirica's team of developers. Clients building their own solutions with the tech means retaining intellectual property rights.
For instance, a cryptocurrency exchange can decide to build its in-house liquidity algos instead of outsourcing or hiring from third parties, and they can then control the liquidity and algos as they wish. This in term means liquidity for their order books, which increases trust and confidence to their investors and attracts organic volume and scale their operations further.
Once a custom algorithm is developed by the exchanges, it can be hooked to other exchanges to assist in sourcing for liquidity where the exchange that develops the custom algo can mirror prices from many other exchanges and hedge its operations automatically with best prices from other exchanges.
Exchanges can also build and integrate modules like FIX Gateways for institutional investors or matching engine simulators, and other external components. They (exchanges) can also provide their investors with pre-build algorithms and advanced order types in order to trade more or make more transactions. The software helps exchanges to combine market making and manual trading.
They can also leverage smart order routing to aggregate orders from different exchanges into their order books while implementing best execution plans and splitting orders for best execution at multiple venues.
Auton.io provides a BTSDEX Bot for liquidity makers to provide liquidity to decentralized exchanges through market making, in order to make a profit from the bid-offer spread. It currently supports BitShares, CryptoBridge, GDEX and EasyDex.
Users can set up Market Maker instances on desktop and mobile apps, setup the strategy they want, and more.
Like other liquidity solutions and market makers for decentralized exchanges, it is a groundbreaking bot given that decentralized exchanges are notorious for lack of liquidity and volume. The latter is a major reason DEXes have not been popularized. Using bots and software, individual market makers are able to create millions of dollars of volumes while creating profit for themselves even when they have very little amount of fiat.
For instance, with several bots running on exchanges, hundreds of users with $50 investments can add millions of dollars in volume while producing profits. Although this might appear as fixing and manipulating volume, a single user is able to use the bot and carry out 300,000 trades per day for instance given huge price variations from time to time due to high volatility of crypto prices. Co-founder and CTO of Auton Sam Ben said they could up the game to 300 million executions per day.
The company is currently adding pairs for trading with the bot.
BTSDEX Bot will feature 3 market making strategies and like Autonio, feature an algorithmic marketplace enabling anyone and everyone to purchase a successful trading protocol and run it themselves.
Cumberland provides liquidity support to over 40 cryptocurrencies with a 24/7 availability and global footprint so users can do trades around the clock and on the same day. The company operates within a diversified principal trading firm known as DRW, which has more than 25 years of experience in markets around the world.
The firm's platform facilitates timely counterparty communication and settlement with professional on-boarding, value-added services, and relationship management. It also provides comprehensive, on-demand settlement summaries, plus institutional-grade reporting and market insights across regions globally. Cumberland also trades dozens of cryptocurrencies through its over-the-counter trading operation.
The company recently launched Marea, a platform based on graphical user interface (GUI) that allows Cumberland's counterparties to trade with Cumberland electronically. This is an advancement from the previous system where OTC trades were carried out over the phone or via messaging apps such as Skype. The platform offers institutional-grade reporting and insights for counterparties. That means those wanting to trade or to ob-board as counterparties can first have a look at stats and decide.
Although it currently supports a few coins/altcoins for trading, it will be adding more according to last month's interview between The Block’s Frank Chaparro and Cumberland’s head Bobby Cho.