Dynamoid engages primarily in two trading strategies, market making and arbitrage trading. More detailed description can be found from our white paper.
Small, frequent profit-opportunities smoothen volatile cryptocurrency prices
Market making is competing for customer order flow by displaying buy and sell quotations for a guaranteed number of assets. Once an order is received from a buyer, market maker immediately sells from its own inventory or seeks for an offsetting order. Market makers hold large volumes of assets and can fulfill a large amount of orders in the financial markets. Orders are buys or sells and they can happen in a matter of seconds. For example, when an investor is looking for buying Ether on an online exchange, it might have a bid price of $300 and an ask price of $300.10. This means that the market maker is purchasing ETH for $300 and then selling for $300.10 to prospective buyers. Through high-volumes, the small spreads can add up larger yearly profits with low risk.
Arbitrage is the simultaneous purchase and sale of an asset to profit from price discrepancies. It is a trade that profits on the differences of identical or similar financial instruments on different markets or in different forms. Arbitrage opportunities exists as a result of market inefficiencies. Arbitrage provides a mechanism to ensure prices do not deviate substantially from fair value for longer periods of time. Many traders have computerized trading systems set to monitor fluctuations in similar financial instruments. Any inefficient pricing setups are usually acted upon quickly, and the opportunity is often eliminated quickly. However, our research suggests that cryptocurrency exchanges can have substantial price differences before reverting to parity.