Market Maker AMA Recap: Injective & Asymmetries
Thank you all for attending Injective’s first-ever Marketing Making AMA featuring Asymmetries. Please find a recap of the AMA with Elrond below.
Catch the full interview on YouTube: https://www.youtube.com/watch?v=0lrIaJJGOPI
- Justin, Founder of Asymmetries Technologies
- Max, Head of Financial Markets at Injective Labs
- Hannah, Moderator
H: Could you tell us about your background and how you shifted into the crypto space?
J: Hey! I’m Justin, founder and head trader of Asymmetries, which is a leading crypto trading platform in Asia. We have been working with large crypto institutions and market making (mm) with DeFi exchanges. I used to work for banks and leading tech companies in the US but in 2016 I came back to Asia and started my own trading platform. I saw enormous opportunities in crypto which attracted me to the space. Most exciting was the fast pace and technological innovation.
M: I have a mixed background in finance and tech and have been working in the trading industry for the last 15 years. I worked for Tower Research for almost 2.5 years market making for local derivative markets. I used to work for traditional trading firms and trading software companies in Chicago. My crypto journey started as a side hobby and this year I made the decision to turn it into a more serious career endeavor. I want to bring Injective Labs my own expertise in financial markets while providing liquidity to help this industry and community.
H: Can you briefly describe what market making is and how market makers impact liquidity?
M: Market making can be defined as providing either passive or aggressive liquidity from both sides of the orderbook. The key to differentiating a good vs. bad mm is to check their performance during extreme market conditions. If the market is undergoing a huge flash crash, for example, how quickly can the mm provide support or resistance from either side? How quickly can they adjust their inventory risk, how well does their market model work and how smooth is their operation? Also important to look at the kind of strategy they use.
H: Could you describe the types of market making strategies that you deploy on a higher level?
J: Organic mm activities are healthy for the market, not a manipulation. Our job is to lower the liquidity of the market and provide exact liquidity to investors, especially retail investors. Mm strategies vary based on the incentive program as well as other factors.
M: There are three main types: cross-exchange mm, single exchange mm, and cross-market & cross-assets mm.
H: Max, could you recap any interesting findings from Injective’s Astro liquidity incentive program? What’s the plan to bring more liquidity for markets on Injective?
M: We have seen a big ongoing trend where lots of centralized traders are looking for DEX entry points. The most important plan is to provide good product user experience in the first place. Never compromise on quality of product. We have interviewed over forty mm’s and Asymmetries is definitely one of the best. They will join our DMM program to be discussed on the governance forum. Overall we want to help grow the community on Injective.
H: Justin, what is the trading experience like on Injective compared with other DeFi protocols? As an API trader, what is your experience connecting with the Injective API?
J: The Injective team is the most responsive team we have worked with. If we have questions on API issues we get immediate feedback. In terms of unique product features, Injective has the cross-margin feature that can be used in both spot and perpetual markets. Injective also enables you to trade different assets cross-chain.
H: What do you think about the Trade & Earn and DMM programs on Injective? How has the structure impacted how you market make on the exchange itself?
J: Overall the program gives maker and taker incentives to trade and rewards people who pay trading fees. But the highlight is that the program doesn’t require staking or derivative open interest. So it is very retail investor-friendly compared to similar programs. The DMM program exists for the people who contribute sizable liquidity to the market. The amount of rewards attracts algo traders and mm’s alike.
M: I appreciate the risks mm’s take to provide liquidity for any new exchange, a difficult task that requires many considerations. The Trade and Earn program rewards are distributed every week for every epoch, and there is an inflation control mechanism called buy back and burn, to reduce total INJ circulation amounts in the long run.
H: How do you both see the role of CeFi market makers shifting to the DeFi space?
J: Market making in DeFi space is much more rewarding. Mm’s can be more passive and more supportive of projects sine DeFi projects are still in early stages.
M: Lots of traditional mm’s — from Forex, from equity market, from fixed income market — are flooding into DeFi, bringing many sophisticated models and methodologies. At Injective Labs we do not compromise on the quality of product or of mm’s. That’s why we have Asymmetries as well as several other closely vetted mm’s in our pipeline.
H: Max, market makers are starting to ramp up on Injective. How has this impacted market liquidity? What steps are you taking to help market makers ramp up further?
M: This is the second epoch of Trade and Earn and we’ve seen the trading volume go from almost $0 to close to $30 million dollars per day. Haven’t seen anything like this in the history of DEX or CEX. Next goal is to provide not just better UI but more user-friendly products too. These include more bridges, more tradeable market pairs, diversified mm strategies, smaller dev cycle for new features requested by the community, more transparent trading rewards dashboard, new DMM dashboard, more relayers, etc.
H: Justin, do you have anything to add on regarding the success metrics of a market maker? Also for Asymmetries, what are your goals and vision looking ahead?
J: Being a market maker is being a good judge of circumstances and solutions. For Asymmetries we want to work with more DeFi exchanges and help them find tailored programs, and help provide very organic liquidity from day one. And finally we want to work with the smartest and most honest people in the industry.
H: Feel free to discuss anything we haven’t touched on that you want to share with the audience.
M: Injective Labs has a strong combination of blockchain experts and traditional trading professionals, which is what makes building an on-chain limited orderbook possible. We don’t want a quick market performance, we care about the future of this project. We believe the project belongs to the community and the community will help grow the whole project. The community has taken ownership and I appreciate that.
J: We are so happy to work with Injective and see what the bigger picture looks like for their ecosystem. We strongly recommend people trade in DeFi as the industry is growing and improving day by day.
Injective is a custom interoperable layer one protocol for building powerful exchange, DeFi, derivatives & Web3 applications. Injective was created using the Cosmos SDK and is able to achieve instant transaction finality while sustaining lightning fast speeds. INJ is the native deflationary scarce asset that powers the Injective Protocol and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by Pantera Capital.