Numbers and Narratives: An Evaluation Framework For Crypto Liquidity
Quick Take Selecting the right market maker is critical for any project, as their strategies can significantly impact token performance and ecosystem growth. However, some firms engage in questionable practices under the guise of “market making,” posing challenges for a project’s associated token(s). Market makers lacking experience or operating with ill intentions may make unrealistic commitments to reach specific price or volume targets, which can be considered unethical and impractical in a properly fun
Below is a summarized version of The Block Research's Numbers and Narratives: An Evaluation Framework For Crypto Liquidity report. The full PDF version of this report is accessible here .
Selecting the right market maker is critical for any project, as their strategies can significantly impact token performance and ecosystem growth. However, some firms engage in questionable practices under the guise of “market making,” posing challenges for a project’s associated token(s). Market makers lacking experience or operating with ill intentions may make unrealistic commitments to reach specific price or volume targets, which can be considered unethical and impractical in a properly functioning market. Some clients may also engage with market makers without a clear understanding of their needs, only to then realize the mismatch in services.
To avoid such pitfalls, clients must understand the importance of liquidity in crypto markets and the market maker’s role within a partnership. They should differentiate between bad actors and quality market makers, conduct thorough due diligence, and prioritize criteria such as track record, liquidity provision capabilities, and client service quality. Clarifying expectations and setting clear boundaries in the partnership agreement are also crucial to ensure an alignment of interests. With the right partnership, a market maker can provide lasting benefits to a project.
This report will start with a quantitative analysis of liquidity in crypto markets, examining its impact on price volatility across different geographies and assets. It will highlight the significance of robust liquidity in diverse markets for project success. Case studies will illustrate how market makers' liquidity provision has positively influenced clients, such as by reducing price volatility, or spread.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
1.7 Trillion Unlock V.S 1.7 Trillion Buyback: Goldman Sachs Bets on the Latter to Sustain the US Stock Market Bull Run
Goldman Sachs expects US companies to raise $600 billion in 2027, sets S&P target at 8,700 points, and states that buybacks and profits can withstand supply shocks.
Next target 8%? US mortgage rates soar to a three-year high as “higher for longer” trades sweep the real estate market
U.S. mortgage rates are experiencing a sharp upward surge. In just over a month, the average 30-year fixed mortgage rate has climbed by a full percentage point, reaching above 7.5%, the highest level in three years. As a result, homebuyer demand has plummeted, and existing home sales in September are expected to show a significant decline.
Bank of America Hartnett: Interest rate hikes become the biggest bullish factor, the logic of ending the bond bubble is spreading
Bank of America strategist Hartnett has made a counterintuitive assessment: the most favorable event for the stock market before the end of the year would be for the Federal Reserve to proactively raise interest rates in October—using a tightening move to curb the out-of-control long end. If the Fed proves its willingness to control inflation and term premium through an October rate hike, the market may actually stop worrying about the 10-year yield surging toward 6%, thereby easing pressure on stocks. Currently, while US stocks have not yet been brought down by interest rates, cracks are quietly spreading in South Korean brokers, French government bonds, and CCC-rated credit bonds.
Goldman Sachs chart: "Gasoline prices determine the US midterm election"! Prediction market shows "Democrats have a 65% chance of sweeping both chambers"
A recent report from Goldman Sachs shows that the Iran war caused oil prices to surge from $3 to $5 per gallon, while the Democratic Party's lead in the general ballot simultaneously expanded from 5 to 9 percentage points—two trends that closely align. Goldman Sachs believes that Hurricane Isaias, once again impacting 63% of offshore capacity in the Gulf of Mexico, has made oil prices a true "ballot decider." Bank of America warns that if the Senate sweeps both chambers, it will trigger significant risk aversion, potentially causing the stock market to plunge by over 10% and weakening the US dollar.
Crypto prices
More
