From inside the world of
a Crypto Market Maker

Market Making 101: Guide & FAQs

What is crypto market making?

Crypto market making is the provision of token liquidity on centralized (CEX) or decentralized (DEX) cryptocurrency markets, ensuring a seamless trading experience and making tokens more attractive to investors. Learn about positive role of liquidity in crypto, discover examples of liquid and illiquid token markets, read about facts and myths on market making in crypto.
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What is market maker in crypto?

Market makers in crypto are investment firms, usually proprietary trading firms (meaning they use their own capital) and less often hedge funds. They use algorithmic trading techniques to create market liquidity. Market makers play a crucial role in providing liquidity to the market contributing to market efficiency and stability. Learn more about their role in crypto landscape.

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Why use a crypto market maker?

First, token projects must overcome the challenges of attracting users and building a community. With the growing number of users, token projects need to provide a friendly environment for trading tokens on cryptocurrency exchanges. Market makers help unlock their development potential and attract investors to the project. Discover how does crypto market making work and what happens if there is no market maker.

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How does a crypto market maker work?

There are two main liquidity metrics that describe market makers’ work: market depth and spread. These are the main KPI’s that they commit to. Discover definitions of crucial liquidity metrics and their meaning for assessing the token health. In this section you will also read about different types of market makers and cooperation models they use.

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What is a crypto market making strategy?

Market making strategy is an automated investment algorithm that is used to provide liquidity, by filling up the order book with buy and sell orders, so that other market participants, buyers and sellers alike, could execute their orders whenever they need to. Learn more how it works.

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When to use a crypto market maker?

Less liquid or illiquid assets can experience large market volatility, which increases transaction costs for investors caused by significant price movements, wide spreads and high slippage. Market makers prevent these negative effects by making token markets liquid. Read about main reasons to use market making.

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