.png)
What Is a Market Maker?
In traditional finance, a market maker is a firm or individual that continuously quotes both a buy (bid) and sell (ask) price and stands ready to transact at those levels. Crypto market makers operate under the same principle offering services 24/7 and at lightning speed (1).
There are two broad categories in crypto today:
- Organic market makers – whales, hedge funds, or large holders who provide liquidity as part of their own trading or hedging strategies.
Professional / algorithmic market makers – specialized firms such as Wintermute, GSR, Cumberland, Jump Crypto, DWF Labs, Portofino, Flowdesk, and others that run high-frequency algorithms across CEXs and DEXs and are directly compensated by projects (2).
On centralized exchanges, they add resting orders to the traditional order book. On decentralized protocols (Uniswap v3, Aerodrome, PancakeSwap), they provide concentrated liquidity ranges or operate intent-based solvers.
What Do Market Makers Actually Do All Day?
Their core job boils down to four ongoing responsibilities:
- Keeping the bid-ask spread tight – often 0.1–0.5 % instead of the 2–10 % gaps common on unsupported tokens with low liquidity (4).
- Absorbing large orders with minimal price impact by holding inventory and hedging on perpetual futures markets.
- Maintaining 24/7 depth across time zones using automated bots.
- Enabling genuine price discovery so the quoted price reflects real supply and demand rather than manipulation or panic.
Why Liquidity Is the Lifeblood of Any Token
Deep, reliable liquidity directly drives:
- Superior user experience – traders don’t lose 10–20% on every swap due to slippage.
- Higher trading volume – retail and institutions naturally migrate to the deepest markets, creating a virtuous flywheel.
- Functioning derivative markets – perpetuals, options, lending, and borrowing only scale when spot liquidity is robust.
- Reduced manipulation risk – pumping or dumping a token with $20M+ real depth is exponentially harder than one with $200k.
- Better perception and valuation – an illiquid chart screams “dead project,” even if the technology is excellent.
Historical evidence is overwhelming: Solana ecosystem tokens with strong market-maker support (Raydium, Orca, Serum) vastly outperformed technically similar L1s that lacked liquidity layers during 2021–2022. In the 2024–2025 memecoin wave, Pump.fun launches that secured professional MM deals within 48 hours were much more likely to survive past week one (4).
How Projects Actually Pay Market Makers
Professional market making is a paid service. The most common compensation models are:
- Token allocations (typically 5–20 % of total supply, vested 12–36 months)
- Monthly fiat retainers ranging from $50k–$300k depending on target tier and volume
- Revenue-share or performance bonuses tied to average daily volume and spread targets
- Hybrid structures combining smaller token grants with steady fiat payments (5)
Top projects now budget for liquidity the same way they budget for development and marketing.
The Future of Market Making
- On-chain automated market makers are maturing rapidly (Ambient Finance, Maverick, CoW Swap, 1inch Fusion).
- Traditional finance giants are entering the space – Jane Street, Citadel Securities, and Flow Traders have all built or acquired crypto-native MM units.
- Cross-chain liquidity aggregation via LayerZero, Across, and Socket is becoming standard.
- Regulatory frameworks like Europe’s MiCA (fully effective 2025) now explicitly recognize and license market-making activity (6).
References
The information provided in the blog posts on this platform is for educational purposes only. It is not intended to be financial advice or a recommendation to buy, sell, or hold any cryptocurrency. Always do your own research and consult with a professional financial advisor before making any investment decisions. Cryptocurrency investments carry a high degree of risk, including the risk of total loss. The blog posts on this platform are not investment advice and do not guarantee any returns. Any action you take based on the information on our platform is strictly at your own risk. The content of our blog posts reflects the authors’ opinions based on their personal experiences and research. However, the rapidly changing and volatile nature of the cryptocurrency market means that the information and opinions presented may quickly become outdated or irrelevant. Always verify the current state of the market before making any decisions.
.png)
