🔮 The future of tokenization : key trends
And understanding market makers 📈
Today's Agenda...
Matthew Schneider highlights the need for blockchain and TradFi collaboration, emphasizing data-driven tokenization and strategic, long-term solutions. 🌐🔗
Understanding market phases and market maker tactics in the contraction phase helps traders make smarter decisions. 📉💡
⏰ Reading Time : 6 min
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A greater need for collaboration between blockchain and TradFi leaders
The recent upward shift of sentiment and activity in the tokenization of real world assets is paving the way for new leaders and innovators to step up and bridge the gap between existing industries and blockchain solutions.
This article is written by Matthew Schneider, founder and CEO of Building.
Having the Right Conversations about Tokenization
With several years of experimentation behind us, what works and what does not work in tokenization has become more apparent. Objectively, if a solution is repeatedly rejected by the market, that suggests a new approach is needed. How one frames tokenization is increasingly important.
Tokenization and Liquidity: Most issuers have figured out by now that tokenization does not create liquidity. Using tokenization as a precursor to liquidity, rather than causation, is a subtle change in language but will set you apart from preachers slinging buzzwords.
Tokenization and Fractionalization: Seasoned financiers and asset managers know that current software solutions can fractionalize asset ownership without blockchain. By shifting your verbiage away from causation, you resonate with industry professionals. Tokenization is scalable infrastructure for fractionalization and essential for secondary markets.
Tokenization and Transparency: To understand what’s important about transparency, you need to know what stakeholders are looking for. Investors don’t need confirmation beyond a legal document that they have shares in an asset. But time-sensitive information that exchanges hands frequently, like economic pro-formas and construction data, needs proof of its origin, updates, and recency.
Separating the Wheat from the Chaff
This outdated expression that doesn’t resonate with the modern person tells us to identify what’s valuable and focus on that, rather than fluff. Emerging leaders can set themselves apart by truly becoming experts in the blockchain industry and doubling down on problems that are holding back the industry from mainstream adoption.
Data-Driven Decisions: The bridge between DeFi and TradFi is not a platform, it’s data. The better we can offer real-time, attested data collected from real world assets and use this to qualify our tokenization, collateral and yields, the more trust there becomes in digital assets.
Value-Add Solutions: Just because the blockchain solution is different does not mean it’s better. Companies spend millions of dollars creating tech stacks, training their employees, and embedding their competitive edge. They will not pay for your service simply because it’s novel or has the word blockchain. These companies, especially those that operate with economies of scale, will carefully measure cost savings and value-add.
Infrastructure and Longevity: If you want mainstream and long-term adoption of your solution, you must be building with the next two decades in mind. We cannot be chasing fads, as many entrepreneurs were when designing platforms for you to draw an ape and sell it as an NFT. But distributing dynamic NFT infrastructure for property maintenance? That’s a strategic play with industry transformation in mind.
The silver lining to this difficult fundraising environment is that bad projects have fizzled out and smart entrepreneurs are being given the chance to shine. Founders who are hellbent on solving a real issue, sticking to the fundamentals, and adding value to their customers’ lives are rising to the top. If you keep these tips and principles in mind, you can stand out as a voice of reason.
Building is a global platform for tokenizing real estate, supported by advanced data collection and validation at all asset lifecycle stages. Investors and institutions receive real-time, reliable insights, creating truth, transparency, and liquidity in the market.
to learn more about using full asset lifecycle data to qualify tokenization.
Understanding market makers: a beginner's guide to the contraction phase
In trading, knowing the different phases of the market is key to making smart decisions. One important phase is the contraction phase, often influenced by market makers to manage their own portfolios and maximize their profits. This article breaks down the main points from a masterclass of ATS on the contraction phase and market maker tactics in a way that's easy for beginners to understand.
Our source :
What is the Contraction Phase ?
The contraction phase is when supply and demand in the market balance out, meaning buying and selling volumes become equal. This phase is the first of three market phases, coming before expansion and trend phases. Understanding the contraction phase is crucial because it's often where market movements start and where market makers can manipulate the market.
Who are market makers ?
Market makers are entities that ensure there's always someone to trade with, providing liquidity in the market. They manage two types of portfolios:
Positive selection: Positions they want because they believe prices will move in their favor.
Negative selection: Positions they don't want.
Market makers can manipulate the market during the contraction phase to manage these portfolios and keep making profits.
How do market makers manipulate the market ?
Creating balance: Market makers can create an artificial balance in the market by controlling supply. This helps them get positions at good prices before big market moves.
Handling excessive positions: If too many traders are taking the same position as market makers, they might push the market in the opposite direction temporarily. This allows them to offload unwanted positions before the market moves as expected.
Driving market movements: By moving the market to certain levels, market makers can trigger stop-loss orders (pre-set orders to sell or buy if prices hit a certain point). This forces traders to sell or buy, letting market makers adjust their own positions strategically.
Examples of market manipulation
No need for manipulation: Sometimes, market makers don’t need to manipulate the market if traders' positions already align with their own goals. For example, if many traders are betting on a price drop, market makers might let the market fall naturally.
Manipulated movements: Other times, market makers might push prices down or up to rebalance their portfolios. This could involve creating a false movement to trigger traders' stop-loss orders, allowing market makers to adjust their positions.
Conclusion
Understanding the contraction phase and how market makers operate is crucial for any trader, especially beginners. Recognizing these patterns can help you anticipate market movements and make smarter trading decisions. By aligning your strategies with market makers, you can avoid common traps and position yourself for success.
In short, knowing the different market phases, especially contraction, and the strategies of market makers can significantly improve your ability to navigate the trading world effectively.
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Disclaimer : The goal of this newsletter is to inform and produce content related to management in the world of Web3. It is not investment advice. Investments in crypto-assets and NFTs are risky and can result in the loss of your entire capital. Always conduct your own research and exercise caution.