To address the shortcomings of price discovery in centralized finance and over-the-counter markets, Wintermute co-founder Yuan Turpin calls for greater adoption of DeFi.

In a post on social media, Yuan Turbinco-founder of Winterkmtan algorithmic trading platform focused on building liquidity in digital asset markets, highlighted the challenges that come with price discovery in the cryptocurrency industry.

Turpin claims that centralized exchanges like Binance engage in ad hoc arrangements between large buyers and sellers, creating a risk in how consumers interact with different projects across the cryptocurrency ecosystem, skewing market opportunities in favor of larger players.

“The role of the market maker is to assist in price discovery by providing liquidity so that people with opinions can express those opinions by buying or selling,” Turpin said.

The former music prodigy turned cryptocurrency mogul posited that prices are unfair to ordinary buyers due to the influence of huge institutions and traders in the market, with large markets effectively controlling price discovery.

He says large central entities can effectively control price discovery by concentrating trading activity, liquidity and order flow on their platforms:

if you put all this together that means:

when prices go up, they go up in cefi first meaning market makers typically sell on cefi and buy back in defi.

when prices go down, market makers typically buy on cefi first and sell back in defi.

over time, this ensures everyone…

— Yo 🇸🇬 (@YoannTurpin1) January 13, 2025

On the Mimi Solana decentralized market funTorn wrote that meme price discovery is bootstrapped, a process by which the early stage of a token is launched, where limited liquidity and small market size are used to stimulate initial trading activity behind the scenes, without hashing activity.

He adds that Wintermute does not participate in such markets, highlighting the challenges of price discovery in environments defined by constrained liquidity and smaller market dynamics, which he says is poised to make Wintermute a bigger participant in the DeFi ecosystem.