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Coinwatch Track: Fixing the Crypto Market
Crypto markets are like a dark forest.
Dangerous agents lurk in the shadows, preying on unsuspecting traders. Why does it happen? Can it be fixed? Let's break it down.
Who are market makers?
If markets only had people who want to naturally buy or sell, the orderbook would be empty most of the time. People won't be able to trade. Market Makers (MM) solves it by providing bids and offers in an orderbook 24x7.
Market makers generate profit using the spread and arbitrage between different trading venues. The small price difference between MM bids and offers is called the spread.
In TradFi, these firms are tightly regulated. They're paid to provide liquidity. Their performance is tracked with KPIs like spread and uptime. And if they screw around, they get slapped. It's a functioning machine.
The story is different in crypto.
How are crypto MMs different?
Outside of majors like BTC, ETH, & SOL, the crypto order flow pattern is very different. When a crypto token is "hot," everyone wants to buy. And when it's "going down," everyone wants to sell.
This directional order flow means market makers are typically net sellers during rallies and net buyers during downturns. So unlike TradFi, "pure market making" in crypto often bleeds money.
To solve the issue, crypto teams make additional payments or different deal with MMs.
A common mechanism involves the team loaning tokens to MM. At maturity, the market maker can either return the exact amount of tokens or a fixed dollar amount. It protects MMs from losses by practically giving them a call option.
This might not seem like a big issue, but it is.
Many crypto market makers aren't delta-neutral liquidity providers. They're disguised hedge funds with one goal: to extract profit. To make matters worse, crypto isn't tightly regulated like TradFi. And with the Trump administration, many MMs started the "crime season".
They use Gamma Trading (trading around the option strike) strategies. They increase volatility and profit from both upward and downward movements.
Founders and builders didn't have any easy solutions. They have no reliable way to verify their market makers' activities. They only have unverified, self-reported daily statistics from MMs themselves.
Rise of "Active Market Making".
In addition to liquidity, some market makers started offering "price management" to founders. Here's how those deals worked:
- Floating even fewer tokens than advertised. E.g., 1% float on a token that advertises 20% unlocked supply.
- Secretly sell locked tokens at heavy discounts (70-80%) to create funds for pumping.
- Use the fund to buy the very limited token in the market, creating a green chart that'll attract others to buy the token.
Their hope is to attract enough momentum so that the prices will keep going, even when the discounted tokens get unlocked. But often the prices crash overnight, and the chart will look like below.
The active management often won't work because, when the token pumps, the people who bought the discounted tokens will hedge their position by shorting on perp markets. Often, that will kill the chart even before the discounted tokens are unlocked.
These kinds of "price management" and shady market-making activities are exploiting the uninformed retail and liquid funds. They're outright illegal in TradFi. What's the solution for crypto?
Enter Coinwatch Track. It allows projects to see exactly what their market makers are doing in real-time and with 100% verification. This transparency can better align incentives between projects, market makers, and traders.
- It doesn't leak MM's sensitive raw data (trades, open orders) that can be used against them.
- Projects can monitor the aggregated, privacy-preserving statistics (like depth, spread, and volume) of their market makers.
Coinwatch has the potential to create a much healthier crypto market.
The product is still in the early stages. But in the near future, investors should check if the protocol's market-making partners use Coinwatch Track. A "yes" means a more transparent and ethical market structure.
If this data becomes available to the wider public, it could massively boost investor confidence. But realistically, we're not there yet.
Sponsored Deep Dive By Mantle
Mantle Network: The Banking Chain
The bull market seems to be back. ETH pulled a few god candles.
Some might be tempted to chase the 100x microcap. But that's very risky. Looking at projects that have built solid fundamentals over the years is the safer move.
Mantle Network is one such project. And it's visible on the $MNT chart. It's up 17.4% in the last week. And in the last 14 days, it's up 42.1%.
That wasn't an accident. Firstly, $MNT has many benefits & utilities.
- Use it as gas on the Mantle Network.
- On launch pool campaigns on Bybit, you can earn significant rewards using $MNT.
- Lock MNT to earn MNT rewards on the Rewards station from a rewards pool is 1.2M $MNT. And it previously had many other significant reward pools.
- MNT holders can vote on ecosystem proposals and key decisions that impact Mantle.
- You can earn yield via money markets such as Lendle, INIT Capital, Dolomit3 & more. Integrations with Aave and Compound will be coming soon.
The demand sinks alone aren't enough. You need a great product as well. And this is where Mantle truly shines.
The Blockchain for Banking
DeFi has a big problem: it's not integrated with "real life".
Even seasoned crypto investors often treat DeFi as the "wild west" corner of their portfolio—risky, complex, and not exactly the place to receive your paycheck. And Mantle Network has the solution.
UR (yes, pronounced You Are) is a crypto neobank. It'll help users spend, save, and invest across both fiat and crypto finances in one account.
It's built from the ground up with blockchain at its core. It runs on the Mantle Network, so it's Web3 through and through — your keys, your assets.
But it also connects to a Swiss IBAN account, meaning it can handle regular fiat transactions just like your old-school bank. Think buying coffee, paying rent, or sending money to your aunt in Europe—all from the same app you use to stake crypto.
UR has already started rolling out. The beta testing with limited by-invite-only codes has been live since July 11th. Mantle is giving away early access codes to the community. This stage will continue till August 11th.
The features enabled by UR should attract people to use it.
- Seamless fiat & crypto on & off ramps.
- You can spend your fiat and stablecoins anywhere through virtual cards.
- Seamless shift between crypto and fiat within your Mantle Account. It supports major currencies: EUR, CHF, USD, and RMB. More will come later.
- Initially, you can invest directly into Mantle-native products like MI4 and mETH. Later, other DeFi opportunities like crypto-collateralized credit and yield farms will be available as well.
All these promises sound amazing. How is it possible? Weren't fiat & crypto built on different foundations? How's UR & Mantle combining the two?
The image below explains it.
In short, UR is building a compliant, secure system that satisfies Fiat's strict regulations while utilizing crypto as the backend.
Every user will need to complete KYC to use the app. That's non-negotiable, thanks to the TradFi regulations. But behind the scenes, they're using DIDs (Decentralized IDs) and NFT-based credentials to keep it Web3-native.
Here's the important part: Mantle Network will capture the value of economic activities on UR. $MNT token is the best way to get exposure to this "Banking chain narrative".
- UR onchain transactions happen on the Mantle Network.
- All the cool DeFi innovations will be made available to UR users via Mantle.
TradFi is like an old player at the end of his career: slow transactions, settlement time of multiple days, geographic restrictions, high fees, and more.
DeFi will replace TradFi eventually. And Mantle is leading the charge by providing a comprehensive financial solution for people.
But for now, Mantle has another product to meet TradFi where it's at.
Mantle Index Four (MI4)
It's a new tokenized fund from the Mantle team.
It'll provide exposure to blue-chip assets like BTC, ETH, SOL, and USD stablecoins. The assets will additionally earn yield as well. They've added native yield-bearing strategies like Mantle's mETH (an ETH liquid staking token), Bybit's bbSOL, and Ethena's USDe.
Mantle Treasury will deploy up to $400 million as the anchor investment into MI4.
The target market includes both institutional investors and crypto-natives.
- They're leveraging institutional-grade infrastructure, including Fireblocks and multi-signature controls.
- It'll deliver sophisticated portfolio construction methodology within a regulated framework for compliant, seamless onboarding and investor protections.
A traditional fund structure with proper administration, reporting, and compliance has many regulatory requirements. MI4 is a great option for them to access the crypto beta and optimized yield through staking strategies.
Securitize is the leading real-world asset tokenization platform. Mantle has partnered with Securitize to tokenize the Fund interest on Mantle Network. This allows investors to use the tokenized fund onchain when utilities emerge in DeFi.
This MI4 will be available on UR as well. Everyone can now get crypto yield from a seamless web2-like app.
Here's the thing: Mantle isn't building just one killer product. They're building an entire ecosystem.
🚀 DeFi Catalysts
LetsBONK announced that 1% of BONKfun's total revenue will be reassigned from our marketing fund into buying back the top pairs within the BONK eco
Jito introduced the Block Assembly Marketplace. It'll revolutionize how Solana processes transactions.
Ethena also got its treasury strategy company for $ENA. StablecoinX Inc. has raised $260 million which will be used to buy ENA.
Eth Strategy public sale went live. It's a protocol that tries to implement an onchain upgraded version of public company Treasury Strategies.
Aave DAO decided to allow Ink Foundation to launch a white-labelled version of the lending protocol on the Ink chain.
Fluid introduced Fluid DEX Lite, a minimalistic, most gas-efficient DEX focused on handling small swaps on Ethereum. It'll be a credit-based protocol on Fluid.
Ripe Finance is a protocol that promises yield on or borrow against any asset. They've released their tokenomics post.
Ramses Exchange has expanded to HyperEVM. It's a DEX built on the same x(3,3) foundation as Shadow.
Catex went live on Unichain as a MetaLayer of Uniswap v4. It unites hook innovation, ve(3,3) governance, and automated liquidity.
Space and Time introduced Blitzar. It's a GPU acceleration framework that makes Proof of SQL very fast.
📰 Industry News
Coinwatch introduced Coinwatch Track. It'll allow crypto projects to see what their market makers are doing in real-time.
Coinbase launched a CFTC-regulated crypto perpetual trading platform for US retail traders. Many are looking at its impact on HyperLiquid volume.
Tron and Nasdaq-listed SRM Entertainment underwent a reverse merger that involved a $100 million equity investment. SRM was renamed to Tron Inc.
Bitmine acquired more $ETH for their treasury strategy. They now have >566k $ETH, and its value has crossed $2B.
🐦⬛ X Hits
- XRP vs LINK comparison.
- Why is ZORA outperforming others?
- The dark side of Treasury Strategy companies.
- How would an onchain Amazon on Ethereum look like?
- A list of red flag behaviors to be wary of.
😂 Meme
Until next time,
Edgy
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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