Liquidity is the lifeblood of any trading platform – whether crypto or conventional. Without liquidity, the exchange is ordinary software that does not resonate with success.
When it comes to achieving high liquidity, a crypto market maker serves as a catalyst to the same.
Let us gain an in-depth insight into crypto market makers and how they contribute to the growth of a crypto exchange platform.
Understanding crypto market maker and its role
A crypto market maker – who can be an individual or an institutional trader like a bank, a trading firm, or a broker – provides liquidity and depth to crypto markets and makes a profit from the difference between the bid and ask spread.
In many cases, market makers are high-frequency traders. The main role of the market maker is to:
- Quote bid and ask asset prices
- Maintain minimum depth (depth is the ability of the market to sustain large orders of an asset without moving its price significantly)
- Maintain the spread below a maximum limit (spread is the gap between the highest price someone is willing to pay and the lowest price someone is willing to sell the cryptocurrency)
- Maintain orders for at least a minimum time
Market maker vs automated market maker
A crypto market maker is a professional trader who holds a special license to provide liquidity to trading platforms. On the contrary, an automated market maker (AMM) is a type of decentralized exchange protocol that pivots around a mathematical equation to price crypto assets.
The most common formula used by an automated marker is:
x * y = k
Where x and y are the amounts of two cryptocurrency assets in the liquidity pool and k is a constant. It means that the total liquidity of the pool must remain the same.
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Schedule Free DemoHow does a market maker benefit your crypto exchange?
- Manage liquidity on a centralized crypto exchange
A market maker can help your centralized crypto exchange in the following ways:
- Manage the order book
A crypto market maker constantly quotes the bid prices and the ask prices while ensuring that buy and sell orders are fulfilled quickly and precisely. - Purchase facilitation
With the presence of a market maker, the faith of investors and traders in the long-term stability and worth of tokens increases significantly, which inspires both parties to fund the project. - Token prices and trade volume
The market maker empowers cryptocurrency exchanges to maintain high liquidity levels, which helps maintain assets’ price levels, narrow spreads, and achieve a stable trading volume on one or more markets.
- Manage liquidity on a decentralized crypto exchange
Crypto market making software helps a decentralized crypto exchange with the following:
- Setup and control of liquidity pools
Liquidity pools are crucial to ensure that they bring in a growing number of investors. In addition, it helps in the execution of trade with less slippage. - Price maintenance
One of the main objectives of a market maker is to protect the tokens from pumpers and dumpers. - Trading volume assistance
The strong algorithms help maintain a steady trading activity to portray the strength of the project.
Why Antier for crypto market making software development?
At Antier, we are equipped with a team of seasoned blockchain engineers and finance experts who work together to fortify your crypto exchange – whether centralized or decentralized – with market making software crypto.
We provide end-to-end market making services – from devising intelligent market making strategies to building powerful market making software – to help you achieve high liquidity and more investors.
Our experts comprehend your business use and deliver the right services at the right time to accomplish meaningful outcomes for your business.
Connect with our subject matter experts to share your business needs and see how we can help you harness the potential of crypto market making software to fuel your business growth.
