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Sounds like a market maker. In traditional finance the market maker hedges their large liquidity position through options to limit any risk from wild fluctuatio
by koolba 4y ago
Sounds like a market maker. In traditional finance the market maker hedges their large liquidity position through options to limit any risk from wild fluctuations in either direction. In defi, I guess they just hodl and then go bankrupt.
- archi42 4y agoI like the analogy/idea, or more precisely find it amusing. But this company doesn't have the necessary liquidity. Plus I am not sure if there can be a real market maker given the transaction volume and volatility of BTC: In the past the daily transaction volume was in the 3 to 8 * 10^9 [billion] US$ range[1], which is massive. And the volatility isn't exactly famously tame either. For comparison, that company self-reports to have moved a mere 92 million in 5 years. That's like someone with a 500k to 700k portfolio doing 1M worth of transactions in 5 years (should be reasonable?) trying to be market maker for Tesla. [1] https://www.blockchain.com/charts/estimated-transaction-volume-usd https://www.blockchain.com/charts/estimated-transaction-volu...