Introduction
The blockchain and cryptocurrency industry has been on fire in recent years. Many cryptocurrency projects have jumped into the space, attempting to get a slice of the cake. Unfortunately, most of them stopped developing in the end. This article aims to analyze why most crypto projects slowed down drastically after a rapid acceleration in building marketing hype, and highlight the importance of sustainable development for crypto projects.
Major Slowdown Reason: Bad Practices of Market Making
The slowdown of crypto projects can be attributed to numerous reasons. Nevertheless, the core factor is the poor practices of liquidity and market making, aiming to build marketing buzz. Liquidity of a crypto project refers to the ability of a crypto asset to be easily converted into cash or other assets. Market Making refers to the process through which a maker seamlessly provides liquidity for the platform to ensure the order trading. Theoretically speaking, both are good indicating factors of the success of a crypto project. In practice, however, most projects adopt notorious liquidity and market making tricks to manipulate the token price, thereby reaching an inorganic growth.
Negative Consequences
As the saying goes, we can never verify false and falsify truth. The token prices might be manipulated to the desired level in a short period of time, they will be what they are ultimately. Unless the crypto project is extremely well-funded to continuously buy their own tokens, which we would say 99% this will not happen since it is not cost-effective, the stable rising price will eventually evaporate. The investors will soon realize that the project is a total scam. The other crypto projects will soon delist the coin. Worse still, even when the project stops using these black-hat techniques, the industry won’t let it in anymore because the reputation is gone. In short, market making tricks are not the catalysts to the success of a crypto project. They are in fact slowing down the long-term development of a crypto project.
The Key to Success: Sustainable Development
To succeed in the race of crypto projects, we must get back to the fundamentals which are developing quality project features. This can attract real users and help the project gain a widespread usage. Only by doing this can we encourage an organic and long-term escalation in trading volume and token prices, and maintain a sustainable project development.
Hence, at ACDX we pool most of our resources on building the platform and developing the products. Apart from that, we have expanded the team, invested in other operational functions to facilitate the exchange development. Moreover, we pay remarkably close attention to the crypto market to adapt and ensure we are catering to traders’ needs. All of these sounds very old-school, but they can attract real and organic liquidity and market making in the long term, therefore promoting a sustainable project development.
On the other hand, we have an organic market maker incentive program, Liquidity Farming, in which makers can earn additional ACXT by providing liquidity to ACDX. We are aware that liquidity and market making can spell the difference between the success and failure of a crypto project, and therefore we are trying to maintain a sustainable development by developing this organic program.
Conclusion
Sustainability is the key to success. It is indeed tempting to adopt liquidity or market making tricks to build marketing hype in the short term. However, crypto supporters are wise nowadays. They are able to differentiate good and bad projects. They know what an organic liquidity and market making is like. Thus, at ACDX, we put our focus on the fundamentals to develop quality exchange features. We do not overpromise nor create false data to our traders because we believe you deserve an organic and sustainable derivatives exchange.
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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