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Market making is the opposite of directional trading. You are not betting ETH goes up or down. You provide liquidity by offering prices, and you earn the spread between your price and the theoretical value of the option. On b1nary, users sell options (cash-secured puts and covered calls). As a market maker, you buy those options. The user locks collateral and earns premium. You pay that premium and receive oTokens (ERC-20 option tokens).

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How you make money

  1. Spread capture. Price each option using Black-Scholes and bid slightly below theoretical value. The difference is your edge.
  2. Premium decay (theta). Options lose value as they approach expiry. If you hedge directional risk, the option decays while your hedge roughly breaks even.
  3. Volume. Each trade has a small edge. Profit compounds over many trades.

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How you lose money

  1. Adverse selection. Stale prices get filled by informed traders. Short deadlines and fast requoting help.
  2. Hedging slippage. Your hedge fills at a worse price than expected.
  3. ITM settlement. OTokens have intrinsic value at expiry, reducing your net P&L.
  4. Gap risk. ETH moves faster than you can re-hedge.

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The P&L equation

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The agent loop

Your market making agent runs this cycle every ~60 seconds:
1

Cancel previous quotes

DELETE /mm/quotes to clear stale quotes.
2

Fetch market data

GET /mm/market returns spot price, IV, available oTokens.
3

Read your on-chain nonce

BatchSettler.makerNonce(yourAddress). Every quote must include this.
4

Price each option

Use Black-Scholes with spot and IV. Bid below theoretical value.
5

Sign with EIP-712

Build the Quote struct and sign with your private key.
6

Submit quotes

POST /mm/quotes with signed quotes. API validates signatures and nonces.
In parallel, listen for fills on WS /mm/stream and hedge immediately on each fill.

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Onboarding

b1nary is permissioned for market makers. To start:
  1. Send your wallet address to the b1nary team
  2. We whitelist your address on the BatchSettler contract
  3. We create an API key mapped to your wallet
  4. You approve USDC and start quoting
No KYC, no lengthy process.

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Requirements

Optional for Hyperliquid hedging: