Market Maker (order book)
An entity providing liquidity by placing buy and sell limit orders in the order book.
What is Market Maker (order book)?
Market makers are firms or individuals maintaining order books by quoting bids and asks, profiting from spreads and rebates. On centralized exchanges like Binance, they ensure liquidity for pairs like BTC/USD, narrowing spreads to 0.01%. Firms like Wintermute handle billions in volume, using algorithms for constant presence.
They remain neutral, hedging inventory to avoid directional risk. In crypto, market makers like GSR customize strategies for tokens, reducing volatility. Exchanges pay rebates, like 0.2% of trade value, for added liquidity.
Related Terms
Just-In-Time Liquidity Attacks
A MEV strategy where liquidity is added and removed around a large trade to extract profits at the expense of regular providers.
Overcollateralization
A requirement for borrowers to deposit collateral worth more than the loan amount to mitigate risk.
Leverage (Perp Dex)
Borrowed capital used to amplify trading positions and potential returns.
Geth
An open-source Ethereum client software, written in Go, for running nodes, executing transactions, and interacting with the Ethereum blockchain.
AMM (Automated Market Maker)
A protocol that uses liquidity pools and algorithms to facilitate decentralized trading of digital assets.
APY (Lending)
The annualized percentage yield in DeFi lending, accounting for interest compounding.