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0 pointsNursie4y ago0 comments

Yeah, as a retailer their business is far more at risk from market fluctuations I guess. They can ride high in the bull market but a drop in asset price puts everything at risk.

OK, well that does explain things more neatly.

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koolba4y ago· 1 in thread

Sounds like a market maker. In traditional finance the market maker hedges their large liquidity position through options to limit any risk from wild fluctuations in either direction. In defi, I guess they just hodl and then go bankrupt.

archi424y ago

I like the analogy/idea, or more precisely find it amusing. But this company doesn't have the necessary liquidity. Plus I am not sure if there can be a real market maker given the transaction volume and volatility of BTC: In the past the daily transaction volume was in the 3 to 8 * 10^9 [billion] US$ range[1], which is massive. And the volatility isn't exactly famously tame either. For comparison, that company self-reports to have moved a mere 92 million in 5 years.

That's like someone with a 500k to 700k portfolio doing 1M worth of transactions in 5 years (should be reasonable?) trying to be market maker for Tesla.

[1] https://www.blockchain.com/charts/estimated-transaction-volu...

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