A market maker continuously quotes buy and sell prices to provide liquidity on an exchange. Learn how market making works, how makers profit from the bid-ask spread, and how makers differ from takers.
A market maker is a participant that continuously quotes both a buy price and a sell price for an asset. By always standing ready to trade, they provide liquidity — meaning other traders can enter or exit a position immediately instead of waiting for a matching counterparty to show up.
In exchange for taking on that role, a market maker aims to profit from the bid-ask spread: the small gap between the price they will buy at and the price they will sell at. The trade-off is real risk on the inventory they hold while their quotes sit on the book.
The mechanics are simpler than they sound. A market maker looks at the current mid price and posts orders on both sides of it.
A resting buy order posted slightly below the mid price. If a seller hits it, the market maker acquires inventory at a discount to the mid.
A resting sell order posted slightly above the mid price. If a buyer lifts it, the market maker sells inventory at a premium to the mid.
When both sides fill, the maker has bought low and sold high by the width of the spread. Do this thousands of times across a liquid market and the small edges add up. But the strategy has a catch:
To see where these bids and asks actually sit, read our guide on how to read an orderbook.
Every trade has two sides, and exchanges classify each order by whether it adds or removes liquidity.
Posts a limit order that rests on the book and waits. It adds liquidity because it gives other traders something to trade against.
Submits an order that immediately matches an existing one. It removes liquidity because it consumes a resting order off the book.
Because makers provide the liquidity a venue depends on, many exchanges use a fee structure that rewards them. Takers are commonly charged a higher fee than makers, and some venues go further and pay makers a small rebate for adding liquidity. The exact rates vary widely by venue and by your trading volume tier, so always check the fee schedule of the platform you use rather than assuming a fixed number.
For a deeper look at which order types rest on the book versus execute immediately, see order types explained, and for how fees stack up on perpetuals, see funding rates and fees.
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There are two broad ways liquidity gets created in crypto, and the term “market maker” shows up in both — but they work differently.
Liquidity is not a luxury — it is what makes a market usable. Market makers are the reason you can click buy or sell and get filled at a sensible price.
More makers competing to quote pushes the bid and ask closer together, lowering the cost of getting in and out of a position.
Resting orders at many price levels mean large trades can execute without dragging the price far — less slippage for everyone.
When liquidity is standing by on both sides, you rarely wait for a counterparty. Execution feels instant.
Continuous two-sided quoting keeps the visible price anchored close to true supply and demand, reducing sudden gaps.
A market maker continuously quotes buy and sell prices to provide liquidity, earning the spread in return while carrying inventory risk. Makers add liquidity, takers remove it, and healthier markets come from more competition among makers — whether on an order book or through an AMM pool.
The most useful thing to remember is that this is not a closed club. Every time you place a resting limit order, you are contributing liquidity yourself.
This article is for educational purposes only and is not investment advice. Market making carries real risk, including inventory and inventory-value losses, and no outcome is guaranteed. Fee and rebate specifics vary by venue — always check the fee schedule of the platform you use. Facts verified 2026-07-01.
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