When users set up a market-making account, they get a special type of Tradable account, which permits them to trade on the exchange with zero fees and absorb fees when filling orders on the order book, together with a specialized dashboard.
Market-makers have no trading restrictions, provided they meet their vault requirements. We designed our market-making model to attract various ranges of market makers, who are all incentivized to provide deep liquidity. The exact mechanism of how it works is as follows:
- Any users can individually set up their market-making account and begin market-making on Tradable.
- Market-Making on Tradable means placing limit and market orders on the order book as often as possible for other traders trading on Tradable to find counterparties while trading, thereby making the order book liquid.
- Users could automate their market-making process by connecting to our trade API.
- Market-makers pay no maker, taker, or borrow fees on all trading pairs when they are market-making or placing their own personal trades from their market-making account.
- When Market-makers fill an order on the order book, they earn a percentage(15-35% based on vault type) of the trading fees paid by the counterparty they matched their trade.
To become a Market Maker, users have to deposit in a special vault called the Market Making Vault.
Each Market-making vault on Tradable expires weekly(12 pm GMT Tuesdays), and vault rewards are distributed to weekly participants. On default, the vault renews weekly. Each vault has different requirements and is separated based on the deposit amount.
The vaults are;
- Market-makers that deposit between $50,000 and $249,999.
- EWTV (Expected Weekly Trade Volume) of $10M.
- Market-makers that deposit between $250,000 and $1,249,999.
- EWTV of $50M.
- Market-makers that deposit between $1,250,000 and $4,999,999.
- EWTV of $75M.
- Market-makers that selected to use $5,000,000 and above.
- EWTV of $100M.
Market-makers get no downside on our market-making program, provided they meet their requirements.
Market-makers get to pay zero maker, taker or borrow fees on all available trading pairs, thereby saving high costs while trading.
Because they have 0 fees, they also get better prices while opening trades. As a market maker, all your trades open in slight profit once you're not matching against another market maker.
On top of that, they save 14% of their trading capital per year on borrow fees and earn a percentage(15-35% based on vault type) of the trading fees paid by all the counterparties they match their trades with.
The only way market makers lose value is by failing to meet their requirements.
Expected Weekly Trade Volume, EWTV, is the total volume of regular trades (made by non-market makers) we expect market makers to fill a week.
The total volume of a market-maker filling any Limit order on the order book (of both regular traders and market-makers) multiplied by five will be referred to as EtV.
Every Tuesday, by 12 pm GMT, Market Making vaults Tradable expire. Market-makers who fail to reach their EWTV (for non-market maker trades) or EtV would lose 1% of their vault deposits and be forced to pay the trading fees they were supposed to pay for the week.
If Market Maker A, with a trading capital of $500k, had a weekly volume of $50m with regular traders (non-market makers), they would not experience any downside for the week because they met their EWTV.
If Market Maker B, with a capital of $500k, had a weekly volume of $20m with regular traders (non-market makers), they would lose 1% of their collateral and pay the fees they were supposed to pay for the week, for not meeting their EWTV.
However, market maker B will be pardoned if they have a total weekly limit order trade volume of $250m (which is their EtV).
Market makers only lose value if they don't meet their EWTV or limit-order EtV (5x EWTV).