📈Market Making layer
Last updated
Last updated
Market Making encompasses a variety of strategies that market makers deploy to ensure liquidity and generate revenue. Key approaches include liquidity provision for high market-cap coins, project market making to support liquidity for new projects, delta-neutral strategies that leverage future funding rates to maintain a delta neutral position, and additional revenue-generating substrategies like arbitrage and OTC deals for larger projects. Reform DAO currently focuses on liquidity provision, enhanced with integrated arbitrage algorithms, and project market making. These strategies collectively drive trading volume, which generates rebates, reinforcing the DAO’s sustainable growth and capacity to support a diverse range of assets.
Funds moved from the Bonding Router will be strategically diversified across a portfolio of fundamentally strong cryptocurrencies. Within the liquidity provision strategy, Reform employs High-Frequency grid, DCA algorithms and sub strategy arbitrage, which have demonstrated effectiveness in the volatility of the crypto market. Currently, these methods yield an average trading volume of $5 million per day for every $1 million allocated, with realized profits ranging between 0.03% and 0.1%. Rebates earned through this activity are treated as revenue, while realized profits are reinvested into the Market Making layer.
An example of Reform's liquidity provision approach would involve, for instance, placing a 1 Ethereum sell order at a maker price of $1000, alongside additional buy and sell orders at price points between $990 and $1010. By implementing this structured price range, the DAO provides liquidity for larger market cap coins, thereby facilitating market depth. The activity generates volume and earns volume-based rebates, which are recognized as revenue and subsequently directed towards token buybacks. Realized profits from the full buy-sell cycle are transferred back to the DAO Treasury, thereby contributing to long-term growth. This approach not only ensures consistent returns via rebates but also supports a diversified portfolio that strengthens the overall ecosystem.
To uphold transparency and accountability, Reform will compile and publish a monthly trading report on the DAO dashboard as well as across various social media platforms. This report will provide a detailed overview of the number of trades executed, total trading volume, and the rebates and realized profits generated. Additionally, an update will be included on the amount of USD used for buybacks, detailing the quantity of $RFRM tokens repurchased and their distribution. This regular reporting reinforces Reform's commitment to transparent operations, ensuring that all stakeholders are informed about the DAO's financial performance and growth trajectory.
Project market making at Reform differs from standard liquidity provision, focusing on contract-based partnerships with newly launched projects across ecosystems. Two contract models are offered the retainer model and the option loan model each designed to meet the specific liquidity and trading needs of the projects. Custom made algorithms drive each model for the projects, with transparent reporting through the project’s dashboard and live updates on the Reform dashboard.
The retainer model generates revenue through monthly payments from projects in exchange for services like CEX market making, arbitrage, and DEX AMM. This monthly revenue flows into the DAO treasury, fuelling liquidity provision efforts and increasing overall volume and revenue.
In the option loan model, Reform collaborates with projects on specific service requirements and signs a contract, typically for 6-12 months. The project provides Reform with tokens, while Reform uses treasury funds to supply the trading currency. Upon contract completion, remaining tokens are added as revenue to the DAO treasury, with Reform’s liquidity algorithms providing ongoing market-making support for the project.
These models contribute steady revenue to the DAO treasury, enabling Reform to scale liquidity provision, earn additional rebates, and foster a continuously growing, sustainable ecosystem.
Reform prioritizes transparency. This is achieved through the use of a real-time dashboard, which provides visibility into every trade executed by the DAO. Additionally, read-only APIs are available to provide further transparency and access to information about the DAO's assets and distribution.
It is important to note that the DAO will seek to engage in a high volume of trades on a weekly basis, and the operation is fully automated. This means that community members can monitor the performance of the DAO through the dashboard without the need for active participation.
