In crypto markets, liquidity is often measured by what we can see — tight bid-ask spreads, deep order books, and high trading volumes. But behind every quote lies a more complex reality. Market makers must manage inventory, execute hedges, allocate capital across trading venues, and navigate risks that can turn an attractive spread into an unexpected loss. Even strong trading returns may reveal little about the costs and exposures behind them.
As part of the Liquidity Arena AMA Series — a thought leadership series bringing together experts across AI, quantitative trading, and institutional market infrastructure — this fifth episode goes beyond the visible numbers to explore what really drives profitability, capital efficiency, and risk management in crypto market making.
In this episode, we are joined by Keith Tan, Head of Trading at Caladan, and Damon Xu, Founder of 1Token, bringing together perspectives from both sides of institutional trading — liquidity provision and execution, alongside portfolio management, risk analytics, and performance transparency. Together, we explore a fundamental question: "What does it really take to provide liquidity profitably, and how can institutions understand the risks behind the numbers?"
Why This Conversation Matters
As digital asset markets mature, providing liquidity is becoming increasingly sophisticated. A tight spread doesn't necessarily mean a profitable trade, and a strong PnL figure doesn't always reflect sustainable performance. Behind the headline metrics are execution costs, collateral requirements, fragmented positions, and risks that become visible only when markets come under pressure.
For market makers, trading firms, and institutional investors, understanding these hidden factors is essential to evaluating both trading efficiency and long-term resilience. This conversation brings several important questions to the forefront:
Why don't tight bid-ask spreads always translate into realized profits?
How do market makers manage inventory, collateral, and capital across multiple trading venues?
What do headline PnL and performance metrics fail to reveal about underlying trading risks?
How can better data transparency and risk analytics help institutions evaluate trading performance more accurately?
As trading infrastructure evolves, what will matter most for capital efficiency, risk management, and institutional trust?
Featured Speakers
Keith Tan
Head of Trading, Caladan
Keith Tan leads trading activities for Caladan’s partners, including the Caladan API and on-exchange market-making. He brings a strong technical background to his role, having previously worked as an engineer at A*STAR and DBS Bank. Keith also holds a degree in Computer Science and Computational Theory from the University of Melbourne, combining his engineering expertise with hands-on experience in digital asset trading.
Damon Xu
Founder, 1Token
Damon Xu brings over 10 years of experience in crypto asset management to his role as Founder of 1Token. The company provides comprehensive infrastructure spanning portfolio management, risk, operations, and accounting. Beyond these core solutions, 1ndex enables managers to showcase verifiable performance and connect with allocators, while 1Token’s AI Agent supports insight generation and workflow automation, further enhancing efficiency across digital asset management.
Watch the full episode and join the conversation.
When evaluating a trading strategy, what matters more — headline returns or the risks and capital behind them? Share your thoughts below — we'd love to hear your perspective.
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