Active market making is one of the vital components of a successful cryptocurrency exchange, affecting both its liquidity and popularity. To encourage market making on our platform and enhance the trading experience for SpectroCoin Exchange users, we decided to introduce a favourable market maker rebate schedule.
What is a market maker?
To put it simply, a Market maker is a user of the trading platform that places Limit orders at other than the market price. As such orders are usually not filled immediately, they are included in the Order book, providing volume to the market. Thus, they “make” the market.
Market makers are the opposite of Market takers – the users that are willing to pay the market price for their orders and have them executed immediately. Hence, “taking” them from the Order book, in this way reducing the number of orders available.
Although one could find many professional market makers in the world, there is no need to be a professional trader or have the permission of the trading platform to start market making. Every user of SpectroCoin Exchange that places a Limit order for other than the market price is considered to be a market maker, as their bid will add to the trading volume.
Why are market makers important?
Market makers play a key role in exchange platforms. They provide liquidity for exchange users – the ability to buy or sell one asset without affecting its market price. This ability is vital in markets with considerably high volatility, such as the cryptocurrency market. High liquidity gives trading platforms two obvious advantages.
Firstly, market makers have a positive impact on the market price, achieved through a factor known as market efficiency. An efficient market is the one that has many competitive sellers – the assets sold in it cannot be over or undervalued. Otherwise, the orders would not be fulfilled or the seller would experience a loss.
What is more, favourable market conditions can attract additional new customers. The orders that market makers place make the market more efficient – there are usually more offers at various prices that users are willing to take.
In this way, both the trading volume and the trading activity is boosted. As there are many orders available, larger trades can be executed, attracting more prominent market participants who are interested in exchanging large sums of the asset.
Bonuses for market makers at SpectroCoin Exchange
Having made our fee schedule more attractive, we hope to incentivise market makers on the SpectroCoin Exchange platform. Market makers can now enjoy a 0% fee on all trading pairs. That means that if you place a trade order that does not get filled immediately, you will bear no additional transaction costs.
What is more, we are also introducing a rebate program designed to make the process of market making even more appealing. Rebate is a discount paid back to the buyer after the purchase, equal to a certain percentage of the asset value exchanged with an order from the book.
Thus, market makers will be able to earn rewards worth 0.05% of the order value for each executed order at SpectroCoin Exchange. Market makers will get their rewards credited to the relevant cryptocurrency wallet in the currency paid. Please note: pairs with BNK token do not provide any rebates.
For example, a user would like to set up a limit order for buying 1 BTC for 5 ETH. The order is not filled immediately and thus goes into the Order book. Once the order is executed, the user will get 1 BTC for his 5 ETH. Additionally, they will receive a percentage of the amount paid as a rebate (0.05%*5 ETH=rebate).
We believe that these changes will play an important role in boosting the liquidity of the platform. Hence, it will help ensure faster order execution and a fair exchange rate for all customers.
Reap the benefits of our new Market maker program. Sign up now!
If you have further questions regarding market making on SpectroCoin Exchange, please do not hesitate to contact [email protected].