What is a Market Maker?

A market maker is a professional (an individual or a company) player on the exchange with the role of creating liquidity in the crypto market. Market makers are responsible for injecting and maintaining liquidity during the trading day, and they buy or sell assets for their personal accounts. By providing liquidity, market makers enable the smooth execution of trading orders because they ensure an adequate level of availability of cryptos at reasonable prices.

A market maker places an order that is not instantly matched with an existing order, and this order is listed in the order book. Market makers usually buy coins or tokens at the best bid, or they will sell at the best offer. A high level of liquidity and full order books enable small spreads and lower price volatility, making exchanges more attractive for traders and investors. Market makers’ profit for adding liquidity in the market is the difference between the bid and ask prices or spread.