For Crypto Exchanges & Projects

Question 1

What is market making?

Answer

Market making is providing liquidity on the capital markets to make sure there is enough volume at a reasonable price for investors to buy and sell tokens. Market makers provide bids and offers and make money on the spread, just like a currency exchange kiosk. Market making is not new to crypto, it is a well-established financial practice used in the traditional financial markets for decades. You can learn more about crypto market making in our dedicated blogpost.

Question 2

Can I do market making myself or use a trading bot?

Answer

The best crypto market making firms have proprietary software, large development teams and professional traders with years of industry experience. Market making requires major investments in IT infrastructure, algorithm development, risk management policies, and access to working capital. Trading bots are usually very simple algorithms. They may work on “good days” in under-developed markets, but most are not robust and fast enough to compete with the professional market makers.

Question 3

If I am listed project, doesn't the exchange take care of liquidity?

Answer

No. Crypto exchange, like any other exchange, is a platform to connect buyers and sellers. However, if there are few buyers or sellers for your token, there is nothing an exchange can do. Market makers play the role of buyers and sellers. To put it into perspective, up to 50–60% of U.S. equity trading volume comes from high-frequency trading market makers, so that any investor can buy and sell any equity at any time. Most exchanges rely on market makers to provide liquidity on their platforms. In the traditional markets, exchanges and market makers are so interlinked that market makers put their servers and computers on exchange premises. Crypto exchanges are becoming more and more similar to traditional exchanges every day, may require projects to have market makers as a condition for getting listed. Don’t test your luck trying to get listed without getting an advice from a professional market maker first.

Question 4

Does market making help me get listed?

Answer

Having a market maker on board helps you get listed on a crypto exchange, especially if it is a higher tier exchange. The biggest worry of an exchange is having a listed project without trading going on. If the exchange knows that the project has a good market maker, they expect certain trading activity and, therefore, can rely on consistent trading fees. Wintermute is an official market maker and partner on 30+ major exchanges. We know the advantages of different exchanges and can advise you on the best exchage to get listed.

Question 5

Why do I need a secondary listing on a crypto exchange?

Answer

Different exchanges focus on different parts of the market in terms of regions (e.g., US, Asia, Europe), customers (e.g., retail vs. institutional), supported currencies (crypto vs. fiat), level of centralization. By listing on a second exchange you get access to a different set of investors. Many projects start with a lower tier exchange and use it as a reference case to get listed on a higher tier exchange. Wintermute Trading can advice you on the exchange to choose based on your business objectives and past performance. We can also help you get listed on a higher tier exchange or one of our partner exchanges.

Question 6

Does every listed token need market making?

Answer

Yes, because every token needs to have a liquid market as a service for investors and broader community. Top 10-20 tokens can count on market makers coming for free and “making the market”, all other coins need tailored help, otherwise, they risk having illiquid market and unsatisfied investors. Top 10-20 coins also often need help with liquidity on certain exchnages or pairs. Market makers also make sure that the market parameters (e.g., spread, volume) make the participation of more sophisticated investors feasible. For example, if there is a 10% spread on your token, you may attract a few retail investors, but no sane crypto hedge fund will trade. Read more about the need for ICO market making in our blogpost dedicated to the topic.

Question 7

My market liquidity deteriorated. Can liquidity always be restored?

Answer

Market demand driven by high-quality product and product marketing is a prerequisite for long-term liquidity. However, many good projects, especially in the early years or at times of bear markets (“crypto winter”), lack liquidity for reasons that are not internal to the project. In these cases, market making can significantly improve your chances to restore liquidity. Please connect with us and we can give you specific advice on what can be done in your situation.

Question 8

Isn't market making a market manipulation?

Answer

Market making is an established and sophisticated financial practice used for decades in traditional financial markets by some of the world’s best banks, hedge funds (e.g., Citadel), and proprietary trading firms (e.g., Virtu Financial, Optiver, Jump Trading). In traditional financial markets, market making it is regulated, and the times of the Wild West are long gone. In crypto, some agents misuse the term. Read more about the Good, the Bad, and the Ugly practices of crypto market making. Wintermute only participates in the Good practices that are similar to the practices employed by the world’s best market makers in the traditional markets. Actually, all Wintermute founders came from the world’s leading high-frequency trading house.

Question 9

Can market makers "create a trend", promise specific volume or prices?

Answer

Creating the trend (making the price go up) or promising a specific price are the Bad, and Ugly practices of crypto market making. Most of them would be illegal in the traditional markets. These practices are illegal because they are causing harm to investors. Even in the unregulated crypto space you should not get involved into these practices, if not for ethical, then for self-serving purposes. Causing harm to investors will cost much more to you and your reputation than short term returns you can potentially receive. Having said this, the side effects of a professional market making (when combined with good company fundamentals like product and marketing) are indeed higher volumes and positive price trends.

Question 10

What can Wintermute Trading commit to?

Answer

We commit to a specific spread and we make ourselves accountable by linking our fees to the quoting performance. We commit to having our algorithms work for you 24/7, supported by experienced traders, even in fast markets or during unpredictable events. High-quality projects are likely to get better volumes and higher price with market making but we don’t commit to it, because the only way to deliver on that commitment with 100% probability is to engage in unethical practices like wash-trading.

Question 11

We sent you a message but you haven't responded

Answer

We get a lot of questions and requests for market making services. Trust us, we read them all! Unfortunately, many of the messages are from extremely early stage ventures which we are unable to vet. We also get many messages from small projects or exchanges who (we think) are not engaged in the "Good" practices. We published a lot of content here and we are very transparent about our position. We are a startup ourselves with limited resources and we focus these resources on the projects where we see a mutually benefitial relationship. If you believe we have overlooked you, ping us again - you know where to find us.

Question 12

Will market makers come to my crypto exchange or platform for free?

Answer

Market makers come to the exchanges where there are high volumes, meaning profit potential for market makers. If you are new or small, you probably don’t have enough volumes to attract professional crypto market makers. This is a chicken and egg problem. Your volumes won’t grow without market makers and market makers won’t come to you if your volumes don’t grow. One way to solve this problem is to engage market makers on a contractual basis, and pay them fees. Note that no market maker can solve your liquidity if your product does not work well or you are not working with investors to fundamentally generate demand. At Wintermute, we have arrangements to reduce our fees (ultimately to zero) as your volumes grow and we can make sustainable profit. We are also partner with selected exchanges in other business areas, please contact us to learn more.

Question 13

When do market makers provide markets for free?

Answer

Every professional market maker has some kind of formal or informal threshold of when they can make profit. The threshold differs depending on the level of market maker sophistication, but generally a daily volume of at least $1M/pair is attractive for a crypto market maker.

For Crypto Exchanges & Projects

Our market making offer

We create liquid, efficient markets across most trading platforms, coins and pairs

Ways to partner with us

Partner with Wintermute

Engage Wintermute

to help you grow

Frequently asked questions