It seems like everyone defines crypto market-making slightly differently: ask 10 industry OGs & you will get 10 variations of a similar concept. While it may be difficult to pin down market-making, there is one definite characteristic that puts market makers in a unique position to benefit from the growth of the industry.
My readers & projects’ CEOs might look suspiciously at the funny-looking loan structures; these SLAs are hiding an American Call Option that enables market makers to profit from the extreme upside & volatility of tokens. Just to say the obvious, these kinds of SLAs would never be allowed in the regulated world because market makers have a conflict of interest. They should provide liquidity in an undirectional manner, but the “rational” & unethical behavior would be to pump the token, exercise the American Call Option, dump in the open market and make a killing.
Interesting article, i have two questions: 1. Didn’t steal Ftx and Alameda user funds? 2. Is this a requirement for market makers? 😂👎🏽