Market makers act as traders who promote liquidity in the market to ensure efficiency in trading by holding large amounts of assets that can be bought or sold in a very short time. After all, cryptocurrency exchanges have a primary interest in traders who create liquidity and trading volume on their platforms. Therefore, exchanges incentivize traders accordingly.
Market Maker refers to the company or individual involved in the two-sided market of a particular security. This means that it provides supply and demand together with the size of the respective market. Market makers seek to profit from the difference in bid-ask spreads and provide liquidity to financial markets.
Exchanges often calculate the market value of an asset with an order book. This is where it collects all offers to buy and sell from its users. We could send an instruction that looks like the following: Buy 800 BTC for $4,000, for example. This is added to the order book, and will be filled when the price reaches $4,000.
Creators (Post Only) Orders such as those that require us to announce our intentions beforehand by adding them to the order book. We are makers because we have been the “makers” of the market, in a sense. Exchanges are like grocery stores charging individuals to put items on the shelves, and we are the ones who add our own inventory.
It is common for traders and large institutions (such as those specializing in high-frequency trading) to take on the role of market maker. Alternatively, small traders can become makers, simply by placing certain types of orders that are not executed immediately.
Please note that using a limit order does not guarantee that the order will become a maker order. If you want to make sure your order is entered into the order book before filling, please select “Post only” when placing your order (currently only available on the web version and the desk version).