Wintermute, Tron’s official marketmaker, will be responsible to create liquid TRX markets as well as supporting DeFi activities. Wintermute, the Tron ecosystem’s official market maker is now Wintermute. This helps the native TRX token of the crypto project improve liquidity across different exchanges.
Market makers are essential agents in the crypto world. They act as buyers and sellers on both sides of trades, making them more liquid.
A crypto trader may place a sell order for tokens. However, it is possible that there is not an immediate buyer at the trader’s asking price. The price drops until a buyer is found to fill the trade. Spread is the difference between the buy price and the sell price (or the offer or the bid). Spreads that are large can indicate an illiquid market and could also signify high volatility.
Wintermute can help facilitate trades and reduce volatility
Wintermute, a market maker, acts as an intermediary to help fill these trades, reduce volatility and maintain a tight spread between trading pairs.
Similar services are offered by other companies such as B2C2, Alameda Research and Cumberland. These firms charge a small fee because it is risky to fulfill these orders. Many of these companies also offer services through various decentralized finance protocols ( DeFi).
Wintermute will not only provide liquidity for TRX but also help in the development of the Tron ecosystem. Wintermute’s business director, David Micley, said.
He said, “Whether it was through the Grand Hackathon’s judging, joining the TRON DAO Reserve whitelisted member and most recently launching the partnership as the designated liquidity supplier for TRX,” he added.
Tron’s DeFi blockchain is crypto’s second largest after Ethereum, in terms of Total Value Locked (TVL).
TVL is a measure of how much money is being spent on the various projects that are built on top of a particular blockchain. There are currently $5.84 trillion in TVL across Tron’s 10 projects. Ethereum boasts $35.22 trillion . This figure is derived from 553 different projects.
Since the launch of its stablecoin USDD, Justin Sun’s crypto project has seen a significant spike in activity. Initially planned to be an algorithmic stabilitycoin. However, USDD’s model was modified in May after the collapse at Terra’s algo-stabilized UST. It adopted a hybrid model that combined elements of an algorithmic and collateral stablecoin.
JustLend, Tron’s Aave and Compounded, offers close to 10% returns on USDD.
Tron’s native token TRX is tied to USDD. Each time Tron users want to make more USDD they have to burn TRX. TRON DAO oversees the stablecoin and whitelisted members, including Wintermute, can use the mint-and-burn method to increase their stablecoin.
Micley stated that there is “a lot of exciting activity in the TRON ecosystem” and that it was great to see opportunities to help.