Due to the boom of Bitcoin and cryptocurrency assets trading, more startup companies and cryptocurrency exchanges are employing market makers to provide liquidity and depth for the assets markets.
With Market Making Strategy, the market makers execute buying and selling orders within a specific market. This way they not only “create” a liquid market, but also earn profit by selling at a slightly higher price than the market price. Because market makers bear the risk of covering a given asset, which may drop in price, they are compensated for this risk of holding the asset. The market making industry has remained mostly centralized, while DeFi has been growing extensively.
Avatea taps into this new industry and expects all DeFi projects to move to fully decentralized market making protocols. Avatea is an algorithmic-based decentralized market making system designed to bring a complete decentralized market making solution onto multiple chains.
Avatea enables projects to automate their market making through a decentralized solution. Avatea enables both the project’s team as well as significant holders to sell their holdings in a responsible way without affecting the project’s valuation.This allows projects to take full control over their own market making and make direct adjustments.
Avatea furthermore, enables users to utilize their cryptocurrencies by supplying tokens to the network that may be borrowed to create liquidity.
This creates a secure lending environment where the lender receives a compounded interest rate annually (APY) paid per block, while the borrower pays interest on the cryptocurrency borrowed.
Post originally appeared on: https://avatea.io/what-is-a-market-making-strategy-and-how-it-can-be-used-in-the-cryptocurrency-markets/
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