Founder of Blur: The liquidity provided by market makers makes it safer to buy new collections

According to reports, Pacman, founder of Blur, said on social media that most of the trading volume in the traditional market and the token market came from a few market makers (MM). In the NFT market, the trading activities from MM and collectors seem very different. Before Blur, there were very few MM in NFT. As the market matures, you will see more MM enter the market.

Interpretation of this information:

Pacman, founder of Blur, highlighted the importance of market makers (MM) in traditional and token markets on social media. He pointed out that most of the trading volume in these markets comes from a few MM. However, things seem to be different in the NFT market, where collectors and MM are driving trading activities. Pacman noted that before Blur, there were very few MM operating in the NFT market.

The emergence of NFTs has disrupted the traditional art and collectibles industry, leading to a surge of interest from investors, artists, and collectors. The market has expanded rapidly, and the demand for NFTs has grown exponentially. As a result, the role of MM has become increasingly significant, especially because they can provide liquidity and facilitate trades between buyers and sellers.

In traditional financial markets, MM are firms that provide liquidity by buying and selling securities on exchanges. They act as intermediaries between buyers and sellers and are responsible for ensuring that markets are efficient and transparent. Similarly, in the token market, MM play a crucial role in ensuring that tokens are priced fairly and that there is ample liquidity for traders.

However, the NFT market differs from traditional and token markets in that it is driven more by collectors and enthusiasts than by MM. While MM still play an important role in facilitating trades, the bulk of the demand comes from collectors who are willing to pay high prices for unique digital assets. This makes the NFT market more unpredictable, as prices can be driven up by sentimental value rather than fundamental market principles.

Pacman’s observation that the NFT market is lacking in MM highlights a potential bottleneck that could limit growth in the market. More MM entering the market would mean more liquidity, lower bid-ask spreads, and increased transparency. The entry of more MM would also increase competition, ultimately leading to a more efficient market.

In conclusion, Pacman’s comments on the role of MM in the NFT market are significant. The market may be dominated by collectors, but the entry of more MM could bring much-needed liquidity and transparency. As the market matures and grows, it will be interesting to see how MM adapt to this new asset class and what impact their entry will have on market dynamics.