Solana’s ecosystem is heating up, with the meme coin BONK creating a skyrocketing phenomenon. What secrets does the market maker Gotbit hold behind it?
In recent times, the meme frenzy in Solana’s ecosystem has surged, giving rise to several representative projects such as Silly Dragon and Knob.
Especially noteworthy is the first “dog” token in the Solana ecosystem, BONK, which has surged nearly 180 times in the past two months and reached a market value of over $1 billion at one point. It ranks third in the meme sector, following only DOGE and SHIB, and has successfully been listed on top exchanges Coinbase and Binance.
Who exactly is Gotbit, the market maker behind Bonk? Besides BONK, which other projects does Gotbit provide market-making services for? Based on market information and discussions with participants in the market-making industry, Odaily Star Daily will unveil the development history of the meme token market maker Gotbit and explore its market-making strategies.
Having a fondness for meme tokens, Gotbit is an active market maker. As early as the previous bull market, Gotbit started providing market-making services. However, since the team is mainly based in Europe and the projects are primarily European, they have gained a certain level of visibility in Europe but are not well-known in other regions. It was only in recent months with the explosive rise of Bonk that Gotbit truly entered the public’s field of view and became a popular choice for project parties to choose as their market maker.
Traditional market makers mostly rely on market sentiment to assist with token supply and demand, and the rise of tokens is unrelated to market makers, mainly relying on major positive news or market bullish sentiment. Gotbit’s early style was also more traditional as a market maker, mainly providing liquidity to the market and charging project parties corresponding fees and spreads during the transaction process.
Nowadays, Gotbit adopts the more popular active market maker style, where the project party cooperates with the market maker to jointly profit from the secondary market, and the profits are then redistributed between the two parties. This market-making style involves collecting chips during the low period of the project, supporting at key points when there are positive news or a market uptrend, assisting in “pumping” the price, and then offloading at the peak.
Gotbit is particularly focused on meme tokens this year, and the meme token project party must be a genuine entity, which Gotbit’s founder and CEO Alex Andryunin repeatedly emphasizes. Based on past experiences, it seems that Gotbit was “cut” by an unknown meme project party for 500 SOL tokens.
Why is Gotbit so fond of meme tokens? There are three reasons:
1. The surge of meme tokens easily triggers FOMO sentiment in the market, making it easy to attract retail investors.
2. Meme tokens are easy to ride on hot topics, taking cues from figures like Musk and Dogecoin.
3. Meme tokens do not have strong opposing holders for Gotbit since the project parties are all partners.
Currently, besides Bonk, Gotbit also provides market-making services for Solana’s reverse meme token analos and Bonk’s reverse Knob. Among them, analos has already surged 3,800 times in less than a week, and Gotbit has announced its investment in analos. The future development can be anticipated as well since Knob just announced its cooperation with Gotbit yesterday.
However, evaluations of Gotbit on social media are mixed. On-chain detective ZachXBT has expressed caution about any project collaborating with the market maker Gotbit Hedge Fund and has disclosed a report. According to the images shared by ZachXBT, one can glimpse Gotbit’s trading tactics:
1. In the initial minutes of the price discovery phase, the price is pushed up by 10 times to create FOMO and accumulate buying power as much as possible, reaching the limit, and then selling a large amount of tokens during the subsequent surge.
2. Within the first 12 hours, the goal is to quickly profit from existing arbitrage opportunities.
3. The target trading volume on launch day is over $50 million, generated freely through the trading generation system on CEX.
4. Achieve a 20 times ATH within the first peak on launch day and reach a 25 times ATH within the first month of trading.
The materials provided by ZachXBT can confirm to some extent the active market-making style mentioned earlier. Gotbit’s market-making strategy for project parties leans towards profit, manipulating token prices and offloading at high points.
Gotbit’s market-making style is sweeping the crypto market. Through conversations with market-making practitioners, it has been discovered that market makers similar to Gotbit’s active style are gradually increasing.
Market makers in the market can be broadly categorized into three types:
1. Passive market makers, who help project parties provide liquidity. Their market-making strategies mostly involve loan+call option (borrowing coins from project parties + bullish options) and are more suitable for periods with sufficient market liquidity. Representatives include GSR and Wintermute.
2. Market makers between passive and active, who act in the name of investment to acquire low-priced tokens OTC and then sell them on the secondary market. This type of market maker is particularly active during bear market phases. DWF is a representative example.
3. Active market makers, who cooperate with project parties based on the actual situation and profit from the secondary market before listing on exchanges. The profits are then distributed between the two parties. Gotbit is a representative in this category.
Similar to the DWF type of market maker, whose market-making style is too distinct, DWF’s market-making strategy has gradually become well-known to the public. Most on-chain data analysts also disclose the movements of tokens held by DWF on X platform.
The rise of active market-making styles is to some extent influenced by DWF and is more conducive for market makers to increase their marginal returns. Furthermore, smaller market cap or yet-to-be-launched project parties prefer to cooperate with this type of market maker. The price pump brings more attention to the project and enhances its popularity.
However, for traders in the market, the strategy of active market makers can cause a short-term surge in a certain token, triggering a significant amount of FOMO sentiment among investors, leading to hasty trading decisions. Investors are reminded to invest rationally and not blindly chase after surges.