Market Making
Market makers on SphereNet play a crucial role in maintaining deep, stable liquidity pools. The platform provides comprehensive tools and incentives to support professional market making operations.
Incentive Structure
Market makers on SphereNet generate revenue through two primary channels. The first is base yield earnings, which are earned passively on USD holdings. These yields are generated from underlying treasury instruments and automatically distributed to token holders, providing a baseline return on capital.
The second revenue stream comes from market making rewards. These additional incentives are provided for active liquidity provision, with rewards scaled based on order book depth and adjusted for market conditions. The allocation of these rewards is performance-based, ensuring alignment with platform objectives.
Becoming a Market Maker
To participate as a market maker on SphereNet, participants must meet several key requirements. This includes maintaining the required Sphere verification badge and meeting minimum capital requirements. Market makers must also integrate with the platform's market making API and comply with established performance metrics while supporting the required trading pairs.
Performance Evaluation
Market maker performance is evaluated through two primary lenses. The first focuses on order book depth, where market makers must maintain minimum liquidity requirements, meet spread maintenance obligations, fulfill volume commitments, and maintain a consistent time-weighted presence in the market.
The second evaluation area is market quality. This encompasses price consistency across the platform, spread tightness, fill ratios for submitted orders, and overall quote stability. These metrics ensure that market makers contribute to a healthy, efficient market environment.
Risk Management Framework
SphereNet provides market makers with sophisticated risk management capabilities. For position management, the platform offers real-time exposure monitoring, automated position rebalancing, risk limit enforcement, and comprehensive collateral tracking.
The platform also implements market protections including circuit breakers, quote throttling, anti-gaming measures, and emergency controls. These safeguards help maintain market stability and protect against adverse events.
Technical Integration
Market makers can access the platform through direct API integration, which includes WebSocket market data feeds, REST endpoints for order management, real-time position updates, and risk management interfaces.
Additionally, institutional tools are available for performance analytics, compliance reporting, settlement systems, and treasury management. This comprehensive suite of tools enables efficient operations while maintaining market integrity.
This robust market making framework ensures deep, stable liquidity while upholding market integrity and operational efficiency.