How to profit by market making on NebliDex
May 10th, 2020
Using NebliDex, you can now earn a profit on each trade just
by making the market. Compared to most cryptocurrency exchanges in which
a market maker can only
make profit by taking advantage of the spread in the ask and bid orders while the exchange keeps all trade fees for itself,
NebliDex rewards market makers with the entire taker fee in the requested cryptocurrency. Market makers do not have a trade fee but they still have to pay a relay
fee. Please see here
for more information on the new fee structure.
The taker fee is 0.2%
per trade which is similar to industry standards. Centralized exchanges and some decentralized exchanges use trade fees from
makers and takers to pay for maintenance and development of the platform and to pay salaries to the platform administrators. Because NebliDex doesn't have
any administrators and the exchange is ran by code, the taker fee goes entirely to maker, thus giving market makers two revenue channels to make a profit:
using the spread to take advantage of the price differences between the asks and bids and now a 0.2% profit from the taker just by completing the trade.
Why is this significant?
Trading typically involves making profit with very tight margins. Instantly when a position is opened on a traditional market, the trader starts in the negative
due to trade fees and just to break even, the trader must make a profit. On NebliDex, makers start with a 0.2% profit and can build from there if they chose to.
For example, if you have 1 Bitcoin and you want to market make in the BTC/USDC market with a spread of 0.008% and an ask price of 8600 USDC, when your limit orders
are matched on both sides of the spread, you will come back into Bitcoin with about 1.004 BTC, a 34.40 USDC profit based on just trade fees and a small spread.
How do I get started?
Grab the NebliDex client, either download the binary
or build from the Github source
to use the exchange.
The NebliDex desktop clients also support a Trader API that allows for automated bot trading to make market making easier. See the API
to learn more about the Trader API.
Client ran command line