A market maker, also known as a liquidity provider, is a company or individual that buys and sells large amounts of assets to keep the market liquid. While market makers are not always required when organic trading volume is high, many exchanges—both stock and crypto—use them to ensure liquid markets. Market-making provides traders with ample trading liquidity, low slippage, and faster trade execution times, especially for larger orders. Market makers “create a market” in order to earn money by taking a cut of the bid-ask spread of the assets for which they provide liquidity.
A Home for All Things DeFi