The Economy of Scale
(courtesy of Cyber Drops Dev Team)
We believe that the most interesting proponent in trading is volume. Volume tells a story. Volume can speak of good tidings or bad, or precipitate a movement in a number of ways — but it always will tell a story. This story allows people to make judgments about how the rest of the world, the “counterparties” find the asset, and their appetite for such. Indeed, some find technical analysis little more than hypotheses, but certainly the amount of participants in the market and that contraction and growth forms the living, breathing, vital pulse of the almighty dollar.
Humans traditionally have a hard time visualizing big data because we are very intimate with our perceptions — what you know to be true is what you get, and that singular experience drives us. However, by coming together, en masse, we are able to realize not just additive power, but a force multiplier — crowd psychology.
Market makers have the absolute power in their hands to work within their environments to exploit their information advantages with exchanges, to ensure that how we perceive the market individually is advantageous to them, and as they are the shepherds of their own engines and data, we are only able to perceive what they want us too. Jon Stewart recently came out with an extremely informative piece on Gamestop on “The Problem with Jon Stewart’’ detailing some great lengths that market makers will go to to try to contain things — and with the unrest in the world and inflation, they have their work cut out for them.
The Network Effect, or “demand-side Economies of Scale”, states that a good or service becomes more valuable when more people use it. Certainly the explosive growth in certain NFT’s show this to be a palpable experience we can all think of examples of, but this is really defined by the value that the user gets from the product, and equally important, the value that the user gets from the network using the product. Once a product reaches critical mass of either the inherent value of use, or the network value, it amplifies the value of the other. This, in turn, attracts the other side, in a virtuous cycle that can really can move quite quickly.
The idea behind the “Economy of Scale” in general, is that as a business gets bigger, it is able to save more through finding efficiencies in spreading the cost of production over not only many assets, but streamlining the decision making. That decision making is fully autonomous, and a consistent risk application formula is applied to provide a rigid experience.
I think we can all appreciate that the Economy of Scale is an idea that we all, in some way, do our part to make up the ecosystem of it. All together, and that is what makes up trading volume — our real time representation of the eagerness of participants to be in the market at that time.
The Jupiverse, feels the realization of its Economy of Scale through that it creates a vacuum in its wake, one that smaller and larger participants study in their own way — taking the temperature of the assets. This reflection includes the sentiments of all of the other participants in the market — what position they took and how it affected the market is going to be right there on the ticker tape, creating a Price through Demand. So those looking to be one step ahead of the Economy will try to anticipate and outbid, depending on the appetite of the market to guide them in their moves — and these people will see Jupiverse bids and look to ride the cresting wave — allowing the Jupiverse to realize, over time, an overall improvement in how our bids are received by the market by being bigger and being able to leave more of a mark.
At times, we will be with the market, at others, against it — but if we can reach critical mass in any of our buys, then we will have created a divergence, a market discount toward the current sentiment.
When the signal comes through, an individualized selected area in the orderbook to be compelled for a fund will blow open a trade — and this trade will come down the line, leaving a small imprint on the orderbook by itself — but together?
Organic players, and algorithmic counterparties too, will take their queue from their environmental sensors telling them they have sensed a divergence and act accordingly. Break their parameter, and they will crush themselves out of their position, allowing the divergence to “play out”. This is the power of weaponized finances — democracy by dollar — allowing a group bid discount, if you will, from the market overall, as opposed to what a singular bid would do. Bulk purchases — and sells — will always feel more impactful to the smaller fish — and by eating those fish on the way, stopping them or liquidating them, one only grows bigger.
The greater the host, the greater the ripple — and the smaller the market cap, the bigger the movement, and the Economy of Scale’s Jupiverse application will come to force decision-making on other participants, then it seems reasonable and true that the total sum of assets-under-management, and their application, is the actual, real, discernable power and force exerted on the market. It is my belief that as this power reaches certain thresholds upon the Volume and oscillators that a greater than 100% value will be reached at critical areas, allowing our weight to work for us.
The market, though, has its own designs — the sum of all the other traders and counterparties. These particulars result in some wild situations, and the world we live in is wild already. So when a lifeline goes out to a trade, having it be reinforced by the trade net autonomously allows us to create our own Economy of Scale — we will have cost savings and higher production levels because we will have impacted the asset perceptibly, and by not selecting for trades considering our own volume, it will self select for better resolutions as the host grows stronger.
We will be considerate of shepherding the product, the product will shepherd the trades, and the trades will shepherd the resolution through unity.
United we stand, divided we fall
-Cyber Drops Dev Team
About Cyber Drops DAO
Cyber Drops DAO is the industry leader in decentralized algorithmic trading. We are a community driven DAO built on Ethereum. The future is a decentralized, autonomous, and transparent world. Together, we are working to build the Jupiverse.
Links:
📚White paper: https://tinyurl.com/yrv5k5w2
💼 Discord: discord.gg/cyberdrops
🪶 Twitter: https://www.twitter.com/CyberDropsDAO
