Top 5 Crypto Market-Making Firms

Market-makers are a vital part of the crypto ecosystem. They provide liquidity for both buyers and sellers, enable token issuers to increase market cap, drive high organic trading volumes, and make it easier for new and innovative projects to get off the ground. 

These firms are even more important now, given that the crypto winter is partly caused by a liquidity crunch. If the ecosystem will come out from the other side unscathed, it would do so with the help of these firms. 

Why Do You Even Need A Crypto Market-Making Firm?

The most important reason founders need to work with a crypto market-making firm is liquidity. Simply put, liquidity refers to the rate at which a digital asset can be exchanged for fiat without upsetting the price of the asset. 

Markets without liquidity essentially have inbuilt throttles that make innovation nearly impossible, since new projects cannot grow at the speed they ought to grow. For one, illiquid tokens cannot get listings on large exchanges since those exchanges won’t want to take on the herculean task of offering liquidity for the token. 

There is a somewhat popular misconception among founders that liquidity isn’t a function of the market, but of marketing. Some founders believe that making sure there are enough buyers for sellers of their tokens is enough to solve their liquidity issues. But that’s a wildly incorrect assertion, and many of them realize it during their first bear market. 

That’s why Web3 projects often need market-makers. The job of the market-maker is simple; provide liquidity and ensure that no matter what, sellers can always get fiat at a fairly stable price whenever they want to sell. Projects that have a designated market-making firm before going public will have higher investor confidence and will be able to achieve high trading volumes organically. 

Like most services in crypto, there are tens of firms that provide market-making services. However, the nature of crypto means that entrepreneurs need to be careful when choosing one. 

We’ve done the work of researching the ecosystem, and our research tells us that these are the very best and most legitimate market-making firms in the crypto ecosystem right now.

1. Kairon Labs

As a rule, investors should be interested in crypto firms that are birthed during a bear market. This usually means that the firm wasn’t created to chase after the highs of the bull market, and means the firm’s business model has stood the test of fire. 

Kairon Labs is one such company, as the firm was founded during the long crypto winter of 2018. Since 2018, Kairon Labs has built a stellar reputation as the number one market-making firm in the cryptoverse. The firm does (and excels) in everything from exchange listing to market-making and even advisory services. Right now, the firm advises utility tokens and digital assets across 100 centralized and decentralized exchanges in the crypto ecosystem. 

In recent times, the firm has worked with some of the most innovative projects in crypto. These include the move-to-earn app Step, the Elastos ecosystem, the blockchain gaming launchpad Seedify (SFUND), and the yield farming protocol Harvest Finance

Despite the uncertainties that the crypto market has faced since 2018, Kairon Labs has remained a strong refuge for assets. The firm’s team of algorithmic trading experts and highly experienced analysts have ensured digital projects always have an adequate solution to their liquidity needs. 

Asides from being uniquely competent in helping projects stay afloat and succeed in this highly competitive market, Kairon Labs also has an extensive network of partners like VCs, launchpads, and exchanges that provide extra support for projects that they work on.

2. Alpha Theta

Alpha Theta is one of the fastest-growing market makers in the ecosystem. The firm is very big on market transparency, and this allows investors to keep their eye on just how well their investments are doing. 

Since the firm is extremely transparent, they also tend to be very particular with compliance when working on projects. They have a strict AML/KYC strategy that makes sure that their projects remain on course and are in no danger of imploding. 

Aside from having a general strategy that ensures the safety of the company and the safety of investor funds, the firm is also quite operationally sound. The company is staffed with some of the most brilliant analysts, traders, and engineers that the world of crypto has to offer. As a result, the firm’s trading algorithm is inch-perfect. There’s been no report of failures or of projects they are involved with lacking the liquidity they need to succeed. 

Perhaps the most interesting thing about Alpha Theta is its reach and willingness to work with the most innovative projects in the world of crypto. 

3. GSR

GSR is one of the most popular market-making crypto firms in the world, and for good reason too. For one, GSR has nine years of experience with crypto. That’s a lot, given that crypto only really began to kick off around 2011. In essence, they’ve been around for more than three-quarters of crypto’s entire lifespan. One does not stay that long in the market without being extremely competent. 

Over the past nine years, GSR has sourced and provided non-linear liquidity in digital assets for institutional investors, miners, exchanges, and token issuers. The firm has some of the most distinguished financial analysts and developers in the world and has drawn its workforce from places such as Two Sigma, Goldman Sachs, and Tower Research Capital. 

It has a first-in-class trading algorithm that is connected with trading avenues all over the globe and has extremely profitable partnerships with the world’s leading exchanges. 

Despite the liquidity crunch of the present crypto winter, GSR has maintained a stellar performance across all markets. It’s managed to drive liquidity even to the most illiquid markets and has done this without as much as a whimper. 

The firm is a member of the ISDA, which helps it provide safe, fair, and transparent trading in derivatives markets. It’s also a member of the DeFi Alliance, an organization at the forefront of pushing the adoption of DeFi globally. Asides from those memberships, it’s also a part of the Blockchain Association, a community dedicated to improving the public policy environment so that blockchains have a friendly regulatory environment in the United States. 

4. Bluesky

Bluesky is one of the leading designated market-makers in crypto. The firm is also one of the oldest in the crypto ecosystem and has been providing market-making services since 2014. Like GSR, Bluesky has faced some of the most turbulent periods in crypto and has come out still standing. That says a lot about the resilience of the firm and its general operational performance. 

Bluesky stands out from the rest because of its extraordinary quantitative approach to making deals and delivering on its promises, the wealth of experience the team has, and its proprietary algorithm. The company also has a philosophy of putting clients first at all times. This means that, whether as a token issuer or an exchange, entities can always be certain that Bluesky will deliver on its promises. No matter what. 

Aside from the philosophy driving its business, Bluesky is also extraordinary on the operations side. The company has invested heavily in institutional-grade proprietary technology that just works across all sectors of their business. Whether it is custody, compliance, or operations, Bluesky has a reputation for always delivering. 

5. Empirica

While Empirica isn’t the biggest market-making firm in the industry, the firm has shown that one doesn’t need to have the biggest clients to display excellence. Despite not starting as a crypto firm, the company has made the pivot into crypto with some aplomb. 

Of course, the company could never achieve that milestone without operating at a high level of excellence. Its agility in the market has a lot to do with the professionalism of its analysts and developers and the excellence with which it delivers on its promises to clients. 

Today, Empirica partners with medium to small projects to get listed on the biggest exchanges in the world. The company also provides market-making services for such projects and often performs so well that in just 6 to 12 months the projects don’t have to pay for market-making services anymore. They have reached this milestone with over 50 crypto-assets, and currently market-make for them without receiving payment. 

On the Flipside

  • Despite the best intentions of market makers, price volatility is still a big problem in crypto. In most cases, market-makers can only reduce price volatility, not remove it totally. 
  • Some of the biggest market-makers (Alameda Research and Wintermute) have had significant problems in the last 6 months. This means that market-making firms are generally not impervious to the bear market and the general vicissitudes of crypto.

Why You Should Care

Liquidity crunches happen all the time in the crypto market. Entrepreneurs and exchanges who don’t prepare for them by having a market maker on their side will have a harder time surviving than those who do. 

That’s why it’s important to partner with market-makers, as they are the only sort of firms who can provide the sort of ongoing liquidity that projects need to not just survive, but thrive as well. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Victor is a dedicated wordsmith – his words can elicit emotions, but more importantly, persuade and educate. He especially excels in niches such as Web 3.0, NFTs, and Metaverse. Outside of his work at DailyCoin, he loves conscious hip-hop, classical music, and engaging in intellectually stimulating conversations with his friends.