A market maker is an entity or algorithm that continuously quotes buy and sell prices for an asset, profiting from the spread — the difference between the bid and the ask price. Their presence reduces volatility, tightens spreads, and ensures that there's always a counterparty ready to trade. In short, market makers create liquidity — the lifeblood of any market.
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To break it down further, let’s visualize this concept using a whiteboard explainer video. A whiteboard explainer video is a fantastic tool for simplifying complex ideas, like market making, through visuals and narration.