Why Your IDO Needs a Market Maker
Newsweek Magazine cited a survey in January 2022 by the crypto firm New York Digital Investment Group, estimating the total number of Americans who own cryptos at 46 million (about 14% of the population). As a result, people want to invest, and decentralized services are becoming more widespread. In 2020, interest in DeFi skyrocketed. Therefore, a new way of attracting funds – IDOs, began to gain popularity. Projects issue tokens that are already backed by liquidity pools on DEX. In order to participate in the IDO, investors need to register in the white list in advance. IDOs and their launchpads are becoming the future of fundraising, and the increasing number of cases validate the model’s potential. The IDO model is likely to become the most popular blockchain-based fundraising technique in the future.
Planning your IDO
Most crypto projects have a good idea about the sort of investors they wish to attract. While it will be retail or professional traders for some, some are only too happy to entice starry-eyed crypto newbies, while others appeal to OGs who’ve been in the game longer than most.
Targeting for an IDO isn’t just important to inspire interest or build hype, of course. You want to attract the sort of individuals who have faith in the platform and see value in it, who won’t just dump the tokens to make a quick buck and move on. Of course, there will be a percentage of people who dump on the market anyway, but for the most part, you want the audience to be engaged from the get-go. You want to build a community.
Identifying your audience will also help you in other steps. For example, if you’re after Bitcoin holders only, then it is pointless to be building an IDO on Ethereum without supporting wrapped Bitcoin tokens like pBTC, wBTC, or RENBTC. Maybe you want a geographical focus, in which case Binance’s Chinese audience could make a strong argument for you.
You should also plan the token offering to be released over a DEX by creating a strategy that makes sense. The strategy should include the challenge the project aims to resolve, fund allocation, which blockchain the project will run on, the general marketing strategy, and how to spearhead the project post-IDO and maintain that momentum. This is when you need the best IDO marketing strategy.
TOP IDO marketing strategy
With the IDO craze in full swing, it is more important than ever to make sure your project stands out from the crowd. With so many IDOs launching every day, it can be difficult to get noticed. Here are a few tips to help you promote your IDO and stand out from the competition:
- Use social media to your advantage. Create a strong online presence for your project, and make sure to post regular updates. Social media sites such as Medium and Twitter are great ways to reach out and get IDO investors’ attention. A widely publicized marketing plan is necessary across social media platforms to be effective. As a result, more people are becoming aware of the project and connecting with you. The crypto world needs an engaged audience, and social media can help make that happen.
- Get involved in the IDO community. The initial task of any crypto project is to create a strong and active community, which will be buyers of tokens. It is necessary to make an airdrop. Social networks recommend connecting to airdrop – Twitter, Discord, Facebook, Instagram, and Telegram. Crypto airdrops are a marketing strategy used to attract the attention of many people. It is also sometimes designed to reward early users of a decentralized application, such as a DeFi protocol. During an airdrop, eligible users receive a portion of new tokens from a project. The airdrop is the most useful and inexpensive promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. It aims to spread awareness about the cryptocurrency project. Users will receive project tokens for free upon successful completion of tasks.
- Make sure your project is well-prepared. Investors will be more likely to invest in a project that is well-planned and has a solid roadmap. A roadmap that easily explains your project’s history is considered a bad roadmap. You need substantial actions and smart goals that you have to think about for the future instead of normally stating that you successfully introduced your token. This will not only showcase that you are on your way to success but that you also have an effective strategy. The roadmap must have a clear idea and plans to show that you are involved in your project and have a clear vision of what’s next. Any true blockchain solution would feature five distinct elements such as distribution, decentralization, encryption, tokenization, and immutability.
Some effective strategies for crypto marketing include building relationships with influencers, leveraging social media and online communities, and creating engaging content that attracts attention.
Additionally, you can consider partnering with an established marketing firm or crypto marketing agency who have the expertise and resources to help you succeed in this highly competitive space.
Regardless of which strategies you choose, remember that it takes time and effort to build a successful marketing campaign around your IDO. But with some creativity and persistence, there is no limit to what you can achieve.
How to attract more investors to your project
If you have ever raised capital, you know that what most investors look for is, well, other investors. This is mirrored with publicly traded tokens. Lack of liquidity, trading activity, and a wide spread between a buy and a sell price stop traders and investors from engaging with an asset.
The liquidity of a token is crucial. It provides leverage to increase the token’s value. Conversely, it can destroy the token’s value if instant liquidity is not available. A liquidity pool gives liquidity without slippage and at all price levels. At first, projects will need to develop some value for the tokens in order to acquire liquidity and promote switching the tokens in the liquidity pool.
Illiquid markets are easily disrupted (remember BNB/BUSD) not only by sellers but also buyers, which may result in a pump-and-dump situation for illiquid tokens. None of these contributes to a sustainable and trustworthy market.
Having a market maker service provided by GOCHA adds much-needed liquidity to the token and helps to overcome many hurdles. Liquidity always attracts more liquidity and generates trust in the token. A tight spread allows traders and investors to apply more diverse strategies, like arbitrage and high-frequency trading, which are impossible in illiquid markets.
In the end, market makers’ aid in attracting more sophisticated investors and, over time, help fuel the volume and the price of your token.
It is also worth noting that with IDOs, tokens can be traded once they are launched. This enables early investors to invest in the tokens at a low price and later sell them for a higher price. This increases the value of the tokens.
How market maker can contribute to the success of IDO
Liquidity is vital for the survival and overall success of a token or coin. According to Flovtec, in November 2020, the BNB token price paired with BUSD fell from $27 to $0,8 on the Poloniex exchange when a user placed a sell order for 732 tokens, and there was no liquidity to sustain the price of a market. This abnormal decline in price has been attributed to the lack of proper market-making in place for the BNB/BUSD pair at Poloniex at the time. The fact that BNB is one of the top coins by market cap demonstrates how easily a token can collapse without the necessary support.
The success of any type of market is highly dependent on liquidity. A liquid token will get enough buyers and can also be sold easily without making a significant change in price. Liquidity, therefore, plays an important role in market making.
Market-making strategies are commonly used to provide liquidity to digital assets that attract buyers and sellers to crypto trading platforms or exchanges. Market making is represented by many resources as the most desirable and important of all automated services in the crypto sphere. The process begins by setting both a maximum bid and a minimum demand for a digital asset in the crypto market.
The overall market liquidity has a significant impact on its growth, and market makers play an important role in ensuring liquidity. The market-making service has a positive impact on the market and mitigates price volatility by deepening the liquidity of the token book and making it more stable.
By adopting a market maker who provides liquidity on pre-agreed terms, token companies can potentially expect the following benefits:
- Higher liquidity: by having enough liquidity available in the token, investors and founders can invest or liquidate their positions more easily
- Higher trading volume: higher liquidity potentially attracts more interest and trading in the token due to lower transaction costs and market impact
- Lower probability of price manipulation: higher liquidity makes it more difficult to manipulate the price of a token since more capital is needed to move prices
- Higher interest in the token project: more people trading in the token and possible listing on bigger exchanges create more interest and discussion around the token project
- Easier listing on major crypto exchanges: more reputable crypto exchanges are more likely to list a token on their platform, knowing that there is a market maker committed to providing liquidity 24/7.
How to raise more money during IDO
Cryptocurrency market making entails liquidity provision on certain cryptocurrencies by surrendering a high volume of both bid and ask orders to facilitate cheaper enter and exit trading positions for traders.
GOCHA is one of the pioneering crypto market maker companies. We introduce a neoteric approach to market-making services that overthrows the primitive market-making techniques of yesteryears. Our groundbreaking market-making technologies equipped with highly scalable APIs can stream orders from all mainstream and niche cryptocurrency exchanges and liquidity providers.
We have a strong and professional team of finance veterans and technology experts hailing from influential global financial institutions, functioning pragmatically to ensure the deployment of bespoke cryptocurrency market-making bots and strategies.
We also empower market makers and crypto exchanges to execute all popular and tailored crypto market maker strategies on centralized and decentralized protocols, including copy strategies, order back strategies, fixed-price strategies, circuit breaker strategies, etc.