A LIST OF TOP CRYPTO MARKET MAKERS

Table of contents

• Empirica
• GSR
• Wintermute Trading
• Virtu Financial Inc.
• Jump Crypto
• Overview of good and bad market practices
• Summary

Crypto market makers review

In our post, we review five alternative crypto market making services. We will start with our liquidity solution and explain how you can use it to improve your token’s standing in the eyes of one of the two key groups of your project – investors. So, here is a small review of our competition in the crypto market making space. It’s starting as a small list, but with time we will add more credible entities here.

Empirica

In providing an overview of crypto market makers, we will start with our solution, Liquidity Engine, to highlight the most important aspects when choosing the right business partner to provide liquidity in crypto markets. We believe that feeless market making, which is our main focus, makes a difference compared to other offerings discussed below.

The first problem we are trying to address is to help the blockchain project answer, what is the liquidity situation on its token. We have invested years of our work in extensive analytics, sophisticated algorithms, and a data warehouse. It allows us to collect detailed information about each coin every second the slightest move happens to it in one of the markets. We share this processed and aggregated data with the projects we partner with. This allows them to better understand the situation of their tokens on individual exchanges and relate it to competing tokens and the entire crypto market.

Screenshot from one of the dashboards of Empirica’s Liquidity Engine

The second common problem – smaller projects sometimes have difficulty listing their tokens on better exchanges, where many retail investors allocate their capital. The road from launch to listing in credible markets is sometimes long and challenging. However, we can often help here. We have a long history of cooperation and excellent relations with many exchanges. There is nothing unusual about it because we are an essential partner for many of them, sometimes responsible for 20% of their daily volume. This allows us to help our clients get listed on these exchanges, often faster and at a lower cost. If you aim to introduce your token to good exchanges, we will create a plan and consistently implement it. It’s not easy, but possible.

Effective liquidity handling requires including decentralized (DEX) and centralized (CEX). It requires developing a tactical plan that coordinates activities to achieve project goals. This may include pool maintenance, arbitrage, and marketing efforts to engage the community and attract investors. We help with tokens in each of these fields.

Screenshot from one of the dashboards of Empirica’s Liquidity Engine

What are the effects of our market making service? We notice that by adequately setting our liquidity algorithms, we very often lead to an increase in volumes by 30-50% in the short term and up to several hundred percent in the long term. You can discover how we can conduct an effective market making project for your token here:

We increase the volumes of our partners by significantly increasing the depth of order books, building investor confidence in the token, and always being there when investors need us as the other party to the transaction, regardless of the market situation. We know it works because we’ve done it more than it many times.
And now a few words about other companies in the space.

GSR

GSR is a crypto powerhouse, with over 300 hundred people onboard (as of mid-2022). From market making, GSR expanded to other areas such as venture capital and OTC trading serving big names in the industry. Similarly to us, GSR also developed all their trading software in-house.

Wintermute Trading

Wintermute is another crypto market making giant, that experienced rapid growth last year, and similarly as GSR expanded to other areas like OTC and venture capital. Wintermute additionally has also built its own decentralized exchange (Bebop).  Again, Wintermute, like GSR and us, has built its trading systems with its own development team. Seems like this is the way to go if you want to give your customers a competitive advantage.

Wintermute has a lot of bad luck in 2022, as they experienced two big hacks related to their defi operations. Luckily, looking from the outside it doesn’t shake the company’s financial standing and didn’t disrupt Wintermute’s daily business. Looks like hackers are on the hunt for big trading companies, as their operations are very exposed on public blockchains.

Virtu Financial Inc.

Virtu has been operating since 2008 and employs over 900 people. They are not like Wintermute or GSR crypto natives but come from traditional finance, and over a year ago, they came into crypto. This fact is also a sign of the growing adoption of crypto and means that large companies from Wall Street are becoming our competition, and we will not be bored.

They make the markets on the most significant coins on the largest exchanges, we are not sure if they are also in altcoins and defi, but what we really like about Virtu, and why we write about them here, is that the company is public. No, they don’t have a token, but they are listed on the Nasdaq exchange. This gives a lot of credibility because their financial statements for years have been open, transparent, and can be reviewed by anybody. This is an example of a well-organized business that many growing companies can learn much from in new finance. Imagine such transparency of crypto companies. Why are we not moving faster in this direction as an industry?

Jump Crypto

Jump Crypto and Jump Trading jointly employ over 1,200 people. Jump is a behemoth from Wall Street, founded in 1999, whose story began at CME. They also have a venture capital branch of Jump Capital.

Good practices, bad practices

Being long enough in this industry we have observed many different practices, both good and bad. Some of them are applied by market makers, and some are asked by customers wanted to find shortcuts on the path to solid liquidity. Below is a review of important issues that needs to be addressed, when setting up cooperation with a market maker:

Loans – when dealing especially with big market making companies, they often will ask for loans reaching up to 5-8% of your tokens’ supply. Do not agree with that, it’s not justified. Amounts required to effectively support the liquidity of tokens are far less in most cases.

Bots and automatic solutions seem to be tempting. Ease of onboarding and set up. You just enter API keys into the dashboard, set up basic stuff like order sizes, and spread, and click Run, and voila – there is liquidity on the market. We have been building and licensing trading bots for customers for a few years and it worked quite well in cases of simpler topics like arbitrage or execution of large orders. But for market making, which is a complex and multidimensional topic that requires different tactics for different market conditions, additionally with coordination of liquidity on different exchanges, automated solutions lead to mediocre results at best. And most of the time you will just slowly bleed the capital. Top results can be delivered only by top-notch technology. The market is already too competitive.

Size matters – Find a partner of your size – it’s good advice for any business scenario. If you are a small project that makes a deal with a big market maker, you will be their 300th customer. And your less liquid markets will be very uninteresting to them. We have seen this scenario many times – one, two markets actively made, and five others forgotten, with a spread of 2, 3% or more. Top firms just go where liquidity already is. If you want to be important to your partner, find one of less or more your own size.

Volume generation, also known as wash trading, or setting goals on volume or price levels, etc – are practices that are sometimes proposed by unaware customers, and sometimes proposed by short-sighted market makers. These topics are well covered all around the internet. This is manipulation, that gets a project nowhere. Deceiving own investors is never a good idea. There are better methods to break the circle of lack of liquidity. Maybe tougher but working long-term. Everybody was there at the beginning.

Summary

At Empirica, our goal is to make a market of a token so liquid within 6-12 months that you will no it does not need to pay for market making services anymore. We are already doing a market of over 50 coins for which they don’t have to pay us. For over 50 tokens on several exchanges, we make 40-60% of the turnover, quoting them 98% of the time. Since they already have a significant volume, we can earn our own PnL.

And coming back to our list, it’s definitely not complete. There are many smaller companies in the market making area. However, we still need more reliable information from their current or former clients about the quality of their services, and we were hesitant to review them here. But indeed, once we gather more credible information, we’ll be expanding this list, so please check it from time to time.

Here you can learn more about the details of how we build organic liquidity for crypto projects

Author: Michal Rozanski, updated on 12 January 2023