Market Making: Why It Is Crucial For Your Project?
Who is a market maker?
A market maker or a market creator is an organization or inner service of the exchange that creates a reliable and efficient market “buy-sell” mechanism for specific cryptocurrencies. It means an instant execution of orders for buying and selling assets regardless of the size of the transaction.
P2B offers market-making features to empower your listing and ensure the best outcomes.
What is the main problem that market-making solves, and how does it connect with liquidity?
The market makers’ primary role is to add liquidity to the cryptocurrency, which is essential for recently launched projects.
What does liquidity mean in the traditional market? It is the simplicity of conducting economic transactions with an asset. The easier you can buy and sell an asset close to the market price, the more liquid it is. In the context of the crypto market, liquidity often refers to the ease of converting a crypto asset into fiat money or other coins.
Many factors influence liquidity: ease of use of the coin, the legal environment, etc. Market-making services are also on this list. They are efficient tools for stimulating high liquidity.
For example, rate changes of some trading pairs are measured in decimals. When a trading community of a new token isn’t many, it can’t “make a market,” providing natural liquidity to cover all trades. When the crypto project doesn’t supply the community’s interest, there is insufficient money to provide enough liquidity in the market.
In this case, the intermediary function of the market maker helps to provide the required amount of money for trading. Moreover, crypto with high liquidity shows lower volatility and a smaller range in which a price fluctuates during a specific time. It makes them more attractive to investors and traders.
Another point is that market-making organizations ensure smooth and uninterrupted processing of orders in the market, regardless of the transaction size. These companies provide the liquidity volumes necessary for traders and founders of crypto projects. Thanks to market-making efforts, the price doesn’t skyrocket and, thus, doesn’t fall below a threshold.
What are other functions that market makers provide?
Matching and execution of orders
A core function is to find buyers and sellers of a currency pair of a particular volume in the market. Then it matches the order to buy a currency with the order to sell the same asset.
However, it is more complicated because of the need for exact matching orders. And this is the moment when market makers can act as intermediary buyers or sellers. An exchange that provides market-making services allows users to trade any volume instantly. Thus, the crypto project gets the green light to grow its community and attract investments without limitations from the exchange side. And crypto enthusiasts get an attractive picture of promising assets based on the daily trading volumes.
That’s how exchanges keep the market healthy and predictable and cut delays or difficulties in order execution.
Providing market depth
Cryptocurrency market makers can place many limit orders and wait for requests that match them. Their orders increase the current market depth and ensure the selling of crypto without affecting its value. It’s crucial for traders with huge capital, who usually trades big orders. If the depth of the market meets the expectations of bulk buyers, such orders are executed without significant price spikes.
Such a situation shows the quality of services provided by the exchange. Market makers’ presence reduces the risk of liquidity reduction in case one of them stops performing its function.
Spread is the difference between the best bid and ask prices for the asset at the exact moment. Keeping the spread low and relatively fixed on an exchange is essential. It allows market participants to pre-calculate the income from the transaction and assess the risks. Also, spread makes the asset more attractive for trading and investing. It is only possible with the participation of market makers that provide liquidity and stabilize spread levels.
They fix prices for traders so spreads remain as narrow as possible. It also provides more profitable entry points into the market for traders.
What market-making options P2B offers
P2B offers a comprehensive approach to market-making services. It helps young projects gain momentum, attract new investors, and find their loyal crypto community. Here are only a few examples of crypto projects’ advantages with P2B.
Order book filling 24/7: Cryptocurrency liquidity services by P2B
This service provides control of sell/buy bids in an order book on particular trading pairs to keep their correct spreads. It is necessary to show activity and attract organic traders and users.
P2B practice assumes performing this process by crypto market experts. They manually maintain the trading volume, create an attractive trading chart, and engage new traders. Thus, your project reaches specific prices and earns goals faster than automated solutions. We achieve better results than chart bots thanks to our experts’ experience and market skills.
Data transfer to rating platforms
Crypto projects in our exchange meet the requirements of rating platforms such as CMC and Coingecko. Thus, the coins are correctly displayed in the list.
“Green light” of the trust score programs
Our cryptocurrency market-making services are working on trust scores on CoinMarketCap and Coingecko. This service keeps coins attractive to investors.
Do you have any other questions?
The combination of all P2B market-making services creates a favorable environment for new traders and project growth.
We tried to be as brief as possible and, at the same time, share helpful information with you. If you’d like to know about market-making services in detail, feel free to contact our experts.