What Is the Role of a "Market Maker" in Cryptocurrency Exchanges? ▴ Learn

What Is the Role of a “Market Maker” in Cryptocurrency Exchanges?

A Market Maker (MM) provides liquidity to an exchange by simultaneously placing both buy and sell limit orders (bids and asks) for an asset. They profit from the bid-ask spread and help ensure that traders can execute orders quickly with minimal slippage.

In cryptocurrency, MMs can be centralized entities or decentralized protocols (AMMs).

What Is the Role of a Market Maker in Maintaining the Bid-Offer Spread?

Why Do Market Makers Prefer to Trade at the Bid or Ask Rather than the Mid-Price?

What Is the Difference between Market Orders and Limit Orders in the Context of the Spread?

How Does the Depth of the Order Book Relate to the Bid-Ask Spread?