This article explores the key advantages of participating in liquidity provision on Magic Eden's Automated Market Maker (AMM).
Automated NFT Portfolio Management
Magic Eden's automated strategies offer a way to buy low and sell high without the emotional rollercoaster associated with manual trading. For instance, collection-wide bids lower the price with each consecutive purchase, while listing orders increase the price with each consecutive sale.
Market-making orders provide the best of both worlds by allowing you to decrease the price for purchases and increase it for sales, all while generating fees in the process.
Earning Fees
When you set up a market-making order on Magic Eden, you have the flexibility to customize your fees within a range of 0-10%.
This means that you can earn a percentage of each trade for yourself. As a market-maker, it is important to determine a reasonable fee that ensures your pools remain competitive and attract usage.
Additionally, it is crucial to consider the impact of royalties on your potential revenue. Collections with optional royalties present excellent market-making opportunities since the royalties add to any market-making fees you charge. However, collections with enforced royalties may make market-making less appealing due to the reduced revenue potential.