Token Market Making Proposal

Coverage: USDs spot on Binance, Okx, Bybit, Kucoin, Coinbase, Kraken

Loan Amount: $5 million

Term: 1 year

Call Option Strike Price: VWAP - maker_market_share

Amount: $5 million

  • Return of $5 million or USD 10 million (Strike = 2x Market price at inception; 7-day average is acceptable) after one year.

  • Potential for a Strike improvement by 2x market share but not exceeding 25% share, i.e., lowest Strike = 1.5x Market at inception.

  • Targeted exchanges: Binance, Okx, Bybit, Kucoin, Kraken, Coinbase

Maker Market Share

  • The critical component is the maker_market_share, representing the percentage of USDs spot volume traded passively (maker) by the Market Maker during the 1-year Term compared to the volume traded on the five exchanges.

  • The Market Maker is incentivized to maximize maker_market_share by quoting tightly, maintaining narrow bid-ask spreads, and executing large order sizes.

Call Option Details

  • Expiry date at the end of the 1-year contract Term.

  • Strike price is VWAP - maker_market_share.

  • VWAP is the volume-weighted average price of all USD spot trades on Binance in the first 7 days of the Term.

  • Example: If VWAP = 1.3 and maker_market_share = 10.520%, the strike price would be 1.16324.

  • The Market Maker returns $5 million or $5,816,200 USD (or stable coin equivalent).

  • Higher maker_market_share compensates for potential trading losses, driving the Market Maker toward the optimum maker_market_share that maximizes the call option upside.

Reporting

  • The Market Maker commits to providing regular reports encompassing all relevant metrics, with the frequency and content determined collaboratively.

  • Reports will include maker_market_share based on front-office numbers reconciled with exchange-provided data.

  • Periodic requests for maker_market_share will be made directly to the exchanges, ideally sent directly to [Your Team/Project Contact]. Alternatively, exchange-generated reports will be forwarded accordingly.

We invite Market maker to comment on the proposal and provide editional requirements. Please reach to @Eatwoods via Telegram

Last updated