Our approach

Explaining Flowdesk's approach to market making and its comparison to proprietary market making

Market Making as a Service (MMaaS)

Flowdesk's Market Making as a Service offers a plug-and-go tech solution for token issuers to manage their liquidity and trading strategies on both centralized and decentralized exchanges, providing global coverage for their market-making needs. Our low-latency, 24/7 technology and trading infrastructure allow clients to build and actively manage their own liquidity, adapt their strategies in response to changing market conditions and business needs, and receive guidance from our team throughout the process.
Our algorithms constantly renew orders around the mid-price to incentivize traders to execute larger trades, while liquidity distribution adjusts automatically to optimize clients' market-making P&L and ensure a healthy expected return on trading collateral. We also harmonize prices across exchanges, capture arbitrage opportunities, and enhance overall market structure, providing additional P&L for our clients.
We are fully compliant with strict conflict-of-interest, KYC, and AML policies and provide transparent daily and monthly reports, as well as live dashboards for asset valuation. Our service is cost-efficient, allowing clients to retain control of their capital, strategy, and P&L.
In addition to market making, Flowdesk also offers OTC (“Over the Counter”) and brokerage services for crypto-to-fiat or crypto-to-crypto settlements, custody solutions for safe asset storage and management, and treasury management options for generating yields and returns on crypto balance sheets often unused. Our service is connected to more than 100 exchanges, including Coinbase, Binance, OKX, KuCoin, Uniswap and more, as well as multiple blockchain networks. This allows clients to easily access, provide, and manage liquidity on a wide range of platforms.

Table of key features

Feature
Description
Low-latency trading infrastructure
Flowdesk's market-making service uses a low-latency trading infrastructure, which allows clients to execute trades quickly and maintain control of their tokens and trading strategy at all times, in a safe, controlled and transparent environment..
Active liquidity management
Flowdesk's technology allows clients to trade their own liquidity and manage it actively. This means that clients can maintain control of the liquidity they provide, a key feature for cryptocurrency issuers who want to retain control of their assets.
Adaptable trading strategy
Flowdesk's technology helps clients remain flexible and agile in adapting their trading strategy to various market conditions and business needs.
Support at each stage of the token journey
Flowdesk offers guidance at all stages of a project. This can be useful for token issuers who are new to the market or who may need help navigating the complex world of digital asset trading.
Compliance by design
Flowdesk is compliant with all relevant regulations and enforces strict conflict-of-interest policies. We are future-ready by design and are registered as a Digital Asset Service Provider with the French financial markets regulator (Autorité des Marchés Financiers, AMF) for the custody, sales, and trading of digital assets.
Transparency through dashboards
Flowdesk provides transparent reporting and live dashboards, so that clients can monitor their assets and trading activities in real time.
24/7 liquidity
Flowdesk's market-making services are up and running 24/7, which means that liquidity can be provided to the market at all times. This can help to reduce volatility and make it easier for traders to buy and sell the issuer's assets. Our SLA on uptime is 99%, and we have teams in US, EU, and APAC
Connection to multiple exchanges
Flowdesk is connected to more than 100 exchanges, both centralized and decentralized. This allows clients to provide liquidity to a wide range of trading platforms and capture potential arbitrage opportunities.

Proprietary market making vs. MMaaS

There are two primary models for providing market-making services: proprietary market-making and Market Making as a Service (MMaas) in which the client has ultimate control. In this section, we’ll compare and contrast these two models to highlight their key differences.

Proprietary Market Making

In a proprietary market making model, the market maker generally borrows a percentage of the client's token supply as collateral for their market making activities. The market maker has control over the liquidity strategy and keeps any profits during trading.

Key features:

  • The market maker uses issuer’s token and the equivalent from its own funds as collateral for the pair.
  • The market maker has control over the liquidity strategy.
  • The client does not retain control over their loaned tokens.
  • The market maker keeps any profits made.
  • Transparency in reporting tends to be limited.
  • The market maker is incentivized by the token price and P&L generated from trading the client's token.
  • Can be expensive for clients.
The primary downside of using the services of a proprietary market maker is that it can limit the issuer's control over their token. Because market makers are independent entities that operate according to their own strategies and objectives, they may make decisions about trading the issuer's token that are not in line with the issuer's wishes or interests.
For example, a market maker may make decisions about the size and timing of their orders that the issuer does not approve of. This can limit the issuer's ability to control the market for their token, and can make it more difficult for the issuer to achieve their objectives. In addition, if the market maker incurs losses or faces regulatory problems, the token issuer may be affected by these events, even if they were not directly involved.

Market Making as a Service (MMaaS)

In the MMaaS model — which is Flowdesk’s core service — the client retains full control over their own tokens and collateral. They can also adjust their liquidity strategy as needed and own the potential profits from market-making activities.

Key features:

  • The client retains full control over their own tokens and collateral.
  • The client can adjust their liquidity strategy on demand.
  • Fixed monthly retainer.
  • Profits from market-making activities are shared with the client.
  • Full transparency in reporting.
  • Typically cheaper for clients with transparent costs.
  • The market maker is incentivized by market-making performance (through uptime and client trading strategy).

Flowdesk's solution

The role of a market maker is to be a counterparty for buying and selling, ensuring that there is always a relatively fair price available for trading. This is especially important for smaller projects, which may not have a large enough user base to provide consistent liquidity. Without market makers, it can be difficult for users to find counterparties to trade with, leading to a poor user experience and diminishing investor participation/interest.
Flowdesk guarantees a bid-ask spread on a given exchange, with a given uptime and depth. This means that we maintain a certain difference between the best price to buy and the best price to sell a given token. For example, we may guarantee that the price difference between the best buy and sell prices for token XYZ is within a range of 0.1%, and that this will be available 99.5% of the time. The remaining 0.5% is reserved for extremely volatile times. This helps to ensure that users can consistently buy and sell tokens at a fair price.
To provide its market making services, Flowdesk manages its inventory of tokens. This means that we buy back the tokens we have sold, and sell back the tokens we have bought, in order to maintain neutrality and continuously offer our services.
The crypto industry faces a number of challenges, such as a lack of regulation and transparency as well as high fees charged by market makers. Flowdesk aims to address these challenges by offering a trustless and fair pricing model, as well as a user-friendly platform. This enables us to provide a high-quality market-making service to token projects, exchanges, and other clients.

Table of key differences

Feature
Proprietary Market-Making
Market Making as a Service
Pricing
% of tokens lent out + call option for MM
Monthly retainer
Liquidity management
MM has full control
Client can adjust strategy on demand
Control over tokens
No
Yes
Potential profit sharing
No
Yes
Transparency
No – black box trading
Yes – dashboards
Cost
Minimum zero
Max infinite
Low control
Fixed agreed monthly fee
High control on costs
Market-maker’s incentive
Token price and P&L generated from trading
Market-making performance
Last modified 8mo ago