In the ever-evolving landscape of Web3, companies like Animoca Brands are expanding their services to stay ahead of the game. Renowned for investing in and advising Web3 projects, Animoca has recently highlighted a new offering to crypto startups: a specialized market making service, facilitated by their in-house Digital Asset Team.
Taking a closer look, the Hong Kong-rooted enterprise has been actively showcasing this new capability to numerous projects within its impressive portfolio, which boasts more than 400 projects. A few insiders have highlighted that there’s been a concentrated effort to get more projects onboard with these services.
Historically, Animoca has built a reputation by working in the spheres of Web3 project investment and consultancy. Now, this move places them in direct competition with dedicated market makers like GSR, Wintermute, and Keyrock.
So, what exactly is this Digital Asset Team? Introduced in the early months of 2022, it’s a 10-member team that Animoca Brands views as their “treasury team.” Besides market making, they have a hand in setting up nodes and hedging, crucial functions that help temper the unpredictability of Animoca’s extensive collection of volatile tokens.
The official word from the company is that this team’s primary mission is in line with what most corporate treasury teams aim for: to amplify the company’s balance sheet utility. “They ensure there’s sufficient buy/sell liquidity for specific tokens, mirroring what third-party market makers do. The difference is, we’ve decided to bring this in-house for better scalability and efficiency,” commented a representative from Animoca.
The Digital Asset Team’s services have been offered not just to projects within Animoca’s portfolio, but also occasionally to external ventures. For instance, Open Campus, a protocol dedicated to education, stands as a notable client.
To put things in perspective, the concept of market making isn’t confined solely to the crypto sphere. Traditional markets, like those on Wall Street, rely on similar entities to guarantee sufficient liquidity for investors and traders, ensuring smooth transitions in buying and selling stocks or assets. In the crypto realm, specialized firms often support tokens with market making to facilitate a seamless market debut, active trading, and minimal price fluctuation.
Glass Markets’ founder, Matt Batsinelas, put it succinctly, “If an asset issuer dictates the trading strategy, it mirrors situations like Tesla or Amazon controlling their stock’s market making. There’s a pronounced conflict of interest when internal desks in crypto tread the fine line with market manipulation and insider trading limitations.”
However, in defense, Animoca’s spokesperson clarified that their Digital Asset Team isn’t an “in-house trading desk” per se and does not engage in token trading for profits. The services they offer are optional and agreed upon after extensive deliberation.
They further elaborated, “Any company interested in these services undergoes a rigorous vetting process to make sure there’s alignment with our principles and policies.”
Like many crypto-centered entities, Animoca hasn’t been immune to the extended bear market from the previous year. In May, they revealed a 36% drop in their token reserves’ value, which stands at $2.7 billion. Although a comprehensive financial snapshot of Animoca Brands remains under wraps, they recently shared their 2020 accounts after being previously listed on the Australian Securities Exchange
In essence, as Animoca Brands diversifies its services and navigates the vast and volatile crypto sea, it remains essential for industry players and observers alike to understand the nuances and intentions behind such moves. Only time will tell if their market making venture becomes a game-changer or just another service in the vast Web3 ecosystem.
