I'm not sure if follow your logic. I'm not saying you are wrong but I disagree. To me, market making is just a euphemism to wash trading or fake volume. As you pointed:
- Margins in the trading of Steem-Engine tokens are way too high
(but hey that's the real market) - This situation can be corrected by market making activity
ahoa, now we create an entity to reduce the spread by making buy/sell orders (making the market or faking the market activity?) Eventually, most likely often, the 'market maker' will be trading with himself, as the real market is what you state above - Market making can be a damn good business
(ofc it can, one who successfully manipulates the market wins big)
The fact that the 'market maker' is taking risks doesn't say much if he's faking volume or making real trades.
To me, 'market-making' as you said it's just a way to manipulate the market. And it's very different from an investor who just buys low and sells high...It's something usual to lure players and make them think there is more activity that really is. Every exchange does it. In fact, more than 80% of all crypto market is made of 'market makers'.
you can see the definition here:
https://en.wikipedia.org/wiki/Wash_trade
It's very different from someone who is buying low to sell high. That's what we are actually seeing on the Steem Engine tokens. The real demand/offer for the tokens...
You are saying: "let's create a market activity to attract more players" or you are saying: "Invest in SE tokens because they are a good investment to trade or hold" or "Don't stake too much, put some on trading to provide liquidity to the market"...see the difference?
Wash trade
A wash trade is a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the marketplace. First, an investor will place a sell order, then place a buy order to buy from himself, or vice versa. This may be done for a number of reasons:
To artificially increase trading volume, giving the impression that the instrument is more in demand than it actually is.
To generate commission fees to brokers in order to compensate them for something that cannot be openly paid for.
Without taking risks, there is no gain. Wash trading=artificial activity, artificial volume. Volume has nothing to do with gains, but yes, it can simulate liquidity, popularity.
I have no idea if "SE tokens are a good investment". (Although, I invested a lot of money in them.) I'm only saying that the illiquid market can be better with honest market making activity. The cure for poor liquidity is more buying, and not more staking.
Nobody buys your token, but the market maker does. Nobody sells you the token, but fortunately, market maker does. And this person is risking his money and making a profit. What is wrong about it?
Staking is good. But with a liquid market, means, better exit possibilities, there will be more people willing to stake. I hope.
Nobody wants to invest in products which can't be sold at a reasonable price.
I understand what mean, the thing is I don't really get what is in for this market maker if his intention is not to simulate liquidity, popularity and manipulate the market. He really got to believe in the token future, or be a member of the team with A LOT of tokens in the wallet (but then I think we fall into the artificial activity and inside information). It's all about the intention of the market maker and who he is, or for who he works. Hard to set a clear line.
Me too I've made trades with a few tokens, even staked a couple (gg and battle). But looking at the market I don't see much future for them. And, I agree with you, a market maker can help to solve the problem, I'm just not sure if to do that he will need to cross that line. If he doesn't cross, most likely he will take losses, IMO.
Maybe you should "duckduckgo" for more about market makers.
Thinking again, indeed, probably I'm missing some basic concepts on what a market maker is. I'm not an expert on the subject, I'm just expressing my thoughts on it...I'll do the search and learn more about it. Good chat. Thanks for helping clarify and for ur patience :)
I made trades with 5-6 tokens and there is some real demand. Not enugh.