Efficient Frontier

A market maker explains liquidity 🧵👇 (🌊1/10)

We have just completed a 1 month funding rate trade for a client. Their funding rate reached -120bps and then sporadically jumped over the space of the month. Thankfully we were there to deal with this. The result? -Client earned 22.44% on $500k in just 1 month. -Price dislocations were handled and we created market efficiency -Extra volume on both spot and perps for the token We have now closed the instrument and returned the loan of $500k in full. In the past 30 days, the token price action remained relatively flat, falling 6.2%. The key here is that these funding rate trades are time-sensitive. It is best that we get ahead of them in order to capture the full amount.

Volatility is back in crypto, and positioning matters more than ever. With Bitcoin and Ethereum implied vols at 12‑month highs, we’re potentially seeing an end to the prolonged chop that’s defined the market for the last few months. The rise of Hyperliquid and other perp DEXs has amplified flows, funding rates and perp activity across altcoins. This has led to growing price dislocations between spot and perps. When funding rates spike and the basis widens, most treasuries and ecosystem funds are simply leaving yield on the table. These aren’t just “market trends.” They’re time‑sensitive arbitrage windows that need round‑the‑clock, specialized execution. At Efficient Frontier, we’ve built a market‑neutral strategy to capture this: - We close the funding gaps. - We manage the delta‑neutral execution. - We take on 100% of the trading risk. - Fair compensation Don’t let external arb bots extract the value your ecosystem created. Let’s capture it together.

“Bear markets are for building.” “We’re just shaking out the tourists.” The soundbites are nice, but detached from what is actually happening in the books. The reality? A bear market is a liquidity war. If you aren't in survival mode, you won't be around to capitalize when the green candles return. The worst-case scenario? Getting hit with a “Special Treatment” (ST) tag. When liquidity drops, exchanges notice. But an ST tag shouldn’t be a death sentence, and you shouldn't have to pay a massive "re-listing" fee later just because you lost momentum now. We built a tool specifically to track ST-tagged projects across all major exchanges. We’re identifying the teams that are off-course and helping them fix their liquidity health before the delisting notice hits. Don’t wait for the exit. Let’s get you back on track.

@ArrakisFinance Glad to have contributed to this!

We analyzed 125 token launches and spoke with 25+ founders to learn why 85% of tokens launched in 2025 ended the year negative. Only 9.4% of tokens that declined in their first week ever recovered. What drove Week 1 relied on decisions founders often overlooked. The guide covers the decisions that actually mattered, how to model them, and a framework for keeping your token out of the 85%. 👉 Read the Practical Guide to TGE: arrakis.finance/tge-guide

Planning a token launch involves more structural decisions than most teams expect. This guide covers 125 launches and breaks down what actually drove outcomes. If you're preparing for a TGE, this is one of the most thorough resources out there.

Gold and silver saw a sharp, disorderly selloff yesterday—silver down 28%, gold down 8%+. At first, BTC and crypto looked strangely calm by comparison. That calm turned out to be a delay, not a decoupling. Crypto has since followed through: BTC is at $77,650 (down 13% over 7 days), ETH at $2,379 (down 20% weekly), and SOL at $101 (down 21% weekly). All are trading at multi-week lows. From a market microstructure perspective, these are the regimes where market makers widen spreads and liquidity thins out. When fewer participants are willing to show size on the order book, every marginal order has outsized price impact. Less liquidity → wider spreads → greater volatility. Understanding the relationship between liquidity conditions and price action is what separates informed trading from simply reacting to numbers on a screen.

The CLARITY Act delay extends the regulatory gray zone we've been navigating for years—regulation by enforcement rather than statute. Despite bi-partisan support, Senate revisions fractured industry consensus by undermining core market structure goals. If passed, this bill would finally establish which tokens qualify as digital commodities under clear CFTC jurisdiction. For both trading firms and token projects, that means operational decisions based on statute rather than parsing SEC speeches. Senate Agriculture markup on Jan 27 could revive momentum. Passage would formalize what's already true operationally—that the US remains the center of crypto markets.

Altcoin market making has changed. This cycle never had an altseason. 2025 saw liquidity get sucked up by a final few memecoin scams, some large token launches, and crypto DATs & equities. Then we had October 10th to kick alts while they were down. Alt coins need to change their approach to liquidity, and so too do the market makers. Rarely does only a standard call option trading model solve all the token’s needs. We need to think outside the box. Treasury management, perps dex trading, revenue generation and basis trading are just a few of the areas Efficient Frontier are supporting clients on now. It is time to think outside the box. To zig while others are zagging. Whether your priority is maintain strong liquidity on exchanges or earning yield on your idle treasury, we have the solution for you.

There’s been a lot of discussion around Maduro and why Bitcoin didn't really react in the first 2 days, climbing a mere 1% in the first 36 hours. That is, basically flat. At the same time oil prices had drifted lower on expectations of increased supply and US energy stocks have moved higher That can feel confusing, especially given Bitcoin trades 24/7/365 and this occurred after trading hours. But compare this to moments like Russia’s invasion of Ukraine in 2022 or Iran’s initial drone strike on Israel in April 2024. Both events began outside trading hours, both were tectonic shifts to the region. Bitcoin sold off immediately for both down 7+%. This occurred well before traditional markets opened, and took some time to recover. The takeaway isn’t that Bitcoin ignores geopolitics. It’s that markets respond to surprise and forced positioning, not headlines alone. This distinction is central to how we think about liquidity at Efficient Frontier. Designing strategies that hold up during shocks, but also during long periods where ‘nothing’ happens and ensure we are actively deploying capital to maximise ROI.

Don’t follow the experts. Follow the tape. Here’s a sample of expert price predictions of BTC for 2025: • JPMorgan: $170,000 • VanEck: $180,000 • Standard Chartered: $250,000 • Tom Lee: $250,000 • Chamath: $500,000 • Pomp: $500,000 • ARK: $650,000 • BlackRock: $700,000 • Michael Saylor: $1,000,000 • Cathie Wood: $2,000,000 Big names. Big numbers. Very different opinions. We use machine learning and algos to read the market, provide liquidity, and execute the best possible trades. Liquidity is truth. Everything else is noise. So what is your price prediction for next year ;)

We don’t like this chart. But it’s important. Bitcoin’s macro correlations decoupled around the Oct 10th crash. Since then: Rates down → Bitcoin down Equities up → Bitcoin down This cycle, BTC traded like levered Nasdaq. Breaking from speculative liquidity hurts, especially while a significant portion of CeFi liquidity has relocated to DeFi since 10/10. Short-term pain. Long-term signal. Merry Christmas and may we see the correlation flip to positive next year 🎄 Props to @newhedge_io for the data

Every few years, centralized institutions fail the crypto industry. The October 10th crash led the Crypto Fear & Greed Index to fall to 11, matching its lowest reading since the FTX collapse in November 2022. But this crash made FTX look like child's play. $19B in leveraged crypto positions were wiped out, compared to $1.6B. As High Frequency Traders, we operate in the active liquidity zone, the zone where all the trading actually happens. Since the flush, active liquidity has dropped by a staggering 55%. This is the primary reason why there is so much volatility in crypto at the moment. It is also another driver why the DeFi:CeFi ratio is at an all-time high. For tokens who want to maintain their exchange listings and continue to thrive in choppy and bearish conditions, it's important to continue to maintain not just the optics of spread and depth but also active liquidity that participates in trading near the mid-price. If you are looking to maintain your CeFi listings through choppy waters, reach out for support!

Crypto natives will remember the glory days of DeFi Summer in 2020. That hype has matured into real flow, with DEXs now accounting for roughly ~20% of total crypto trading volume and growing. Liquidity is moving on-chain quickly, and infrastructure has evolved with it. On-chain market making used to be mostly passive liquidity on AMMs. Today the space has evolved significantly to order books, proprietary AMMs and more. There are still a number of challenges to overcome compared to CEXs: -Latency is slower and more variable -Integrations are bespoke (not standardized FIX/REST + colo) -Every venue has its own microstructure (AMMs vs off-chain orderbooks vs on-chain CLOBs, plus different pool fee tiers and parameters). At Efficient Frontier, we’re now running HFT strategies on-chain and trading ~$20m on-chain a day and scaling. If you’re a DEX and want serious flow, or you’re building a venue and want to talk onboarding, reach out. Props to @blockworks for the data

𝗜𝘁 𝗶𝘀 𝘁𝗶𝗺𝗲 𝘁𝗼 𝗽𝗿𝗲𝗽𝗮𝗿𝗲 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗵𝗼𝗹𝗶𝗱𝗮𝘆 𝘀𝗲𝗮𝘀𝗼𝗻 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝘃𝗮𝗰𝘂𝘂𝗺. From mid-December, global equity volumes usually drop 45–70%. Crypto experiences a similar trading hibernation and liquidity has been thin since the 10/10 crash. Even with the occasional tax-harvest “Santa Rally,” BTC has been down in 5 of the last 7 Decembers and ETH in 4 of the last 6. Liquidity may get even thinner this year with general crypto flows shifting to equities and traditional markets. So don’t be surprised to see increased volatility and more fragile books. At Efficient Frontier, we are not only trading 24/7 through the holiday period, but also working business as usual throughout.

New site. Same mission. Raising the standard of high-frequency trading since 2017. efrontier.io

Your science fiction is becoming our reality. And it’s closer than you think.

HSBC and @BNPParibas have joined the @GlobalSyncFdn! Their participation reaffirms the financial industry’s collective effort to embrace decentralized technology that prioritizes data privacy, operational control, and interoperability at scale. These two financial leaders join 30+ members to strengthen the governance of the Global Synchronizer — ensuring a reliable, fair, and trusted service for the Canton Network. Read the full announcement 👇 sync.global/press/2025/bnp…

Hey BGA fam! ⏳ Quick reminder that our virtual workshop is THIS WEDNESDAY, August 27th at 5PM CET! We're breaking down the two core market-making models in Web3. Whether you're building, investing, or just curious about liquidity mechanics – come ready with questions for the live Q&A! @AndrewTu_ from @efrontier_io will share real strategies you can actually use. 👉 Join here: lu.ma/enz02848?tk=DF… See you there! 🚀