Pacman, CEO of Blur NFT Marketplace, Explains Role of Market Makers in NFT Trading

Pacman, Founder and CEO of Blur NFT marketplace, recently took to Twitter to shed some light on the dynamics of the NFT market and how the entrance of market makers is set to change the landscape. In his tweet, Pacman explained that the vast majority of volume in traditional markets and token markets comes from a handful of market makers, which is also likely to be the case for the NFT market as well.

Pacman went on to explain that before the introduction of market makers, there were very few in the NFT space. However, with the introduction of market makers like Franklin @franklinisbored and Machi Big Brother @machibigbrother, the space is set to mature, with more MMs likely to come into the space. Pacman emphasized that it’s important for everyone to understand the dynamics at play and that market makers are not wash traders. They provide liquidity and make a profit on the spread around the true price of an asset. Every trade they make comes at a cost in the form of royalties paid to Creators.

Sugar Shane, a TraFi MM, also weighed in on the topic, offering an insightful perspectives based on his experience as a market maker at the Chicago Board Options Exchange and CBOT. Shane explained that market makers are paid to provide a market and that @blur_io is doing just that – paying individuals to be market makers. Part of being a market maker is getting hit on the bids and then selling higher, and today’s markets are so liquid that market makers are not necessarily needed anymore. However, the CBOE was new and needed people like them for liquidity, so the spreads were juicy.

Shane went on to explain that the traders on Blur are not true traders and don’t understand they should have a decent spread between their bid and the sell price. The spread is being filled with $blur, and traders are keeping a tight bid because they think losses will be offset by the drop. While from the outside view, this whole thing may seem silly, from a person that watched exchanges being built first-hand, everything that is taking place has precedent.

The entrance of market makers into the NFT space is set to change the game and allow more players to come into the space. The liquidity they provide makes it safer to buy into new collections, which leads to more volume and revenue for creators. With the NFT space set to see a massive surge of growth, the entrance of market makers is just the start of what’s to come. It will be interesting to see how the experiment plays out and what the blur coin return will be if traders keep a profitable spread up versus an at-the-floor spread. Only time will tell.

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