A market maker is an entity (company or algorithm) that simultaneously offers to buy and sell the same coin, providing liquidity to the market. Without market makers, order books would be empty and trading nearly impossible.
How They Work
Market makers place both buy and sell orders on both sides of the order book. They profit from the spread (difference between bid and ask prices). In return, they ensure you can buy or sell at any time.
On CEXes (Binance, Coinbase), market makers are often large firms with millions in capital. On DEXes, liquidity providers take this role.
Why They Matter
- Tighter spreads — smaller gap between buy and sell prices
- Higher liquidity — trade larger amounts without price impact
- Stabler markets — fewer sudden price swings
Disclaimer: This is not financial advice. Always do your own research.