Animoca Brands Promotes In-House Market Making Service to Startups
Animoca Brands, the web3 investment firm, is actively promoting its in-house market making service to startups in its extensive portfolio. The Hong Kong-based company has been showcasing its market making capabilities to over 400 projects it has backed, potentially competing with specialist market makers such as GSR, Wintermute, and Keyrock. Animoca offers the service through its in-house Digital Asset Team, which consists of ten employees. The team focuses on optimizing the company’s balance sheet and conducts market-making activities to ensure sufficient buy/sell liquidity for certain tokens. Animoca has presented these capabilities to portfolio companies and some external firms that align with its vision.
The Role of Market Makers
Market making is not exclusive to the cryptocurrency industry. Similar firms on Wall Street provide liquidity to investors and traders, facilitating smooth buying and selling of stocks or assets. In crypto, specific companies specialize in market making for particular tokens, aiming to support successful market launches and reduce price volatility. However, the existence of internal market-making teams within broader crypto organizations has raised concerns about potential conflicts of interest and market manipulation. Derivatives exchange BitMEX and a Financial Times report on Crypto.com’s internal trading teams have drawn attention to this issue. Animoca emphasizes that its Digital Asset Team does not engage in proprietary trading or trade tokens for profit.
The Financial Position of Animoca Brands
Like many crypto companies, Animoca has been affected by the prolonged bear market that began last year. In May, the value of its token reserves fell by 36% to $2.7 billion. However, a comprehensive financial report for the company’s current position is not available at this time. Previously listed on the Australian Securities Exchange, Animoca only published accounts for 2020 in June 2022.
Hot Take: The Importance of Transparency and Avoiding Conflicts of Interest
Animoca Brands’ promotion of its in-house market making service raises important questions about transparency and conflicts of interest within the crypto industry. While market making can provide liquidity and support token launches, concerns about market manipulation and insider trading have been raised. It is crucial for companies like Animoca to maintain clear standards and policies to ensure they align with ethical practices. Transparency in financial reporting is also essential to build trust with investors and stakeholders. By addressing these concerns and promoting transparency, the crypto industry can continue to evolve and gain broader acceptance in traditional financial markets.
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