Secondary Distribution describes the process by which existing crypto assets or tokens, initially acquired in a primary issuance event, are subsequently sold by their holders to other investors in the open market. This mechanism contrasts with primary issuance, where assets are sold directly by the issuer, and is essential for establishing liquidity and price discovery for digital assets.
Mechanism
The operational logic involves decentralized exchanges (DEXs), centralized exchanges (CEXs), or over-the-counter (OTC) desks providing the infrastructure for peer-to-peer or intermediated trading of these previously issued digital assets. Price discovery occurs through continuous supply and demand dynamics, often facilitated by automated market makers (AMMs) or traditional order book systems, enabling efficient asset transfer.
Methodology
The strategic approach aims to provide robust liquidity and transparent price discovery for digital assets post-issuance, allowing investors to exit positions and fostering a healthy, functional market ecosystem. It necessitates resilient market infrastructure, efficient trade execution, and reliable pricing mechanisms, which are crucial considerations for institutional investors participating in crypto trading and options markets.
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