Understanding Quote-driven Markets

A Quote-driven market (also known as a price-driven market or dealer’s market), is a trading model that is more commonly found in the traditional markets for bonds, currencies, and commodities in which prices are determined from bid and ask quotations made by market makers, dealers, or specialists. Mobius Finance takes a similar approach when it comes to trading moAssets (synthetic assets). Order execution is done through on-chain oracle-powered price feeds. Collateralized assets on the platform act as the counter-party to market participants; namely the market maker in the “quote driven system”. Mobius Finance trading platform provides quotes for moAssets traders, who may decide to buy or sell by utilizing the currency of settlement (moUSD) in exchange.

The biggest advantage of this trading model lies in the fact that there is no slippage. Once an order has been executed, it is subject to the market maker's offer irrespective of the amount of the transaction. It is in contrast to the AMM algorithm, which requires a deduction of some slippage from the offer by the percentage of the total amount of the liquidity pool.

Secondly, this trading model has better liquidity than the other two models, since the liquidity is not confined to the demand and supply. In other words, let's suppose that the total liquidity of all the assets in all platforms is equal to “X”, the total liquidity in the trading model will be “X” as well.

The key idea here is that anything of value involved can be reduced to merely a data source. In other words, any asset with a stable data feed for quotes could be traded in the Mobius Finance protocol.

It is Mobius Finance's goal to introduce this effective trading model to Decentralized Finance, such trading models will heavily expand the current DeFi ecosystem and introduce more off-chain assets and introduce alternative assets from other protocols to the Ethereum blockchain.