level 1TradingOctober 12, 2022
Market makers provide liquidity to a market by fulfilling orders on either side of the bid-ask spread. If the exchange were a department store, market makers fill the shelves with their inventory and pay a fee. Market makers can range from active retail traders to institutional trading firms.
On CoinFLEX, market makers may be active traders in the standard derivatives markets and the new Permissionless Perp markets.
Takers provide the trading volume that is essential for a market to function. In the same department store analogy, takers are the shoppers who purchase the inventory from the shelves filled by market makers. Takers in crypto may range from active retail traders to institutional trading firms.
On CoinFLEX, takers may similarly be active traders in the standard derivatives markets and Permissionless Perps.
For example, leveraged traders are takers in Permissionless Perp markets. They can use leverage to go long on a token’s futures contracts and double down on their investment. Leverage offers capital efficiency, i.e., a trader using 3x leverage with $1,000 in collateral can buy up to $3,000 worth of Permissionless Perp contracts.
In short, makers provide liquidity by trading with takers, who help ensure prices remain stable. Without makers, trading would be difficult, if not impossible. They are the ones who provide the orders that keep the market moving.
With the growth of CoinFLEX’s Permissionless Listing ecosystem, we foresee makers and takers simultaneously benefitting from the large network effect of token projects and their communities.
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